Early retirement

Boethius

Hi,

I wonder if anyone may be able to comment, I have a company pension which my statement says is worth 14,658.49 I presume this means annually, I paid into this pension for 20 plus years and it started out as a super annuation scheme, as the company I worked for evolved the pension evolved with it, I always opted to stay in something called mirror image scheme.

The above figure is made up of 3 elements which tally up to the final figure.

Guaranteed minimum pension Up to 5/4/88. £1028,92
Scheme pension (over GMP) built up prior to 6/4/98 £4409.16
Scheme pension built up after 5/4/97. £9,220.41
=£14658,49
It also has a line that says scheme cash £43,975.45

When I called the company that sent the statement I came away more confused than ever, the question I asked were

1) is the amount payable annually,
2) what does scheme cash refer to?
3) what age can I retire

I didn't get answers that I understood for the first 2 questions, I know what I want them to mean but it wasn't made clear ( not the person who was trying to explain you understand, I'm sure it made perfect sense to them) and the third question was answered with " you can take t at age 55 but it will be reduced"

Apologies to those who have read and been bored but I am a complete ignoramus when it comes to pensions.

Thanks for reading.


When I called the pen

mania112

1) Those are annual amounts, it will probably be split into 12 chunks and paid monthly ( you may be able to specific how frequently you want the money paid ).

2) Scheme Cash is an actual pot of money just for you (rather than taking from the 'bigger/company' pot that the annual amounts come from). I'm not sure if you can take all of this as a tax free sum, or 25% of it.

3) You can retire from age 55, but the amounts you'll receive will be lower than stated above, which are probably based on a normal retirement age of 65.

Boethius

I have read some of the old threads and something's have become a little clearer,

One more thing is there a hard and fast reduction level?

Thanks again.




QUOTE=mania112;57220693]1) Those are annual amounts, it will probably be split into 12 chunks and paid monthly ( you may be able to specific how frequently you want the money paid ).

2) Scheme Cash is an actual pot of money just for you (rather than taking from the 'bigger/company' pot that the annual amounts come from). I'm not sure if you can take all of this as a tax free sum, or 25% of it.

3) You can retire from age 55, but the amounts you'll receive will be lower than stated above, which are probably based on a normal retirement age of 65.[/QUOTE]

observations_from_a_hill

Pension predictions are like this; most people instantly understand what they mean, but to the rest of us they are impenetrable.

Write again explaining exactly what you have in mind, i.e. "I would like to take early retirement on .... whatever date, is this possible &, if so, what would be my pension benefits?"

Don't know how old you are or how early you are thinking of retiring. If the benefits you were quoted were based on you retiring (& also continuing to contribute) until "normal" scheme retirement age, the actual figures for an early retirement are likely to be a lot lower.

Someone who understands figures may come along later & put me right!

xylophone

Is this a water company pension scheme?
Do you have a scheme booklet?

Bigmoney2

Do you still work for the company the pension is with?

If not you will be a defered pensioner,
the amounts quoted are probably what you would get if retireing at the schemes normal retirement age, probably 65.

The scheme may have a website with details of the scheme rules, which will also say what the reduction will be for going early.
Typically this can be around 5% for each year you go before the scheme retirement date, so if you started to draw it at age 55 (the earliest you can by law, except for some specific circumstances) and the normal retirement age is 65 then 10 yrs at 5% reduction per year would mean a 50% reduction on the figure quoted.

You may have some protection if you joined before certain date and had a retirement age of 60, but this will be in the scheme rules.

If you are 55 or over and are considering taking the pension early you would be best to write to the scheme trustees/ admin company to get an estimate of the pension.



Is the scheme a defined benefit scheme, i.e. a final salary or carear averaged scheme? I'm assuming it is as you mention superannuation.

Boethius

Wow guys, thanks for taking the time to reply, working backwards:

Big M no I don't work for the company now, I took voluntary redundancy in 2009. There is no website that I can find although Towers and Watson appear large enough to have one (I'm sure they have one but not specifically aimed at people with the questions I have.

Xylophone:Yes it is a water company pension, and no I don't have a booklet.

Observations: I am 47 and have no plans to retire just yet, I wish!!

I no longer work for this company because as I said I took redundancy, I do however work for another water company and have started to contribute to their pension scheme?

Thanks again for the replies

mania112

Towers Watson have a poor website (and it's mainly US info, when you do find something).

Each scheme they run has its own phone number, so that should be written on your paperwork somewhere. If not give your old HR dept. a buzz and they'll have the phone number.

I don't believe there is a 'hard and fast' reduction level, but Towers Watson would have the ability to let you know the options.

Being 47, you've got a few years before you can do anything.

xylophone

Type the name of your old water company into Google.
Example here.http://www.prag.org.uk/156/text/140/files/Thames%20Water%20PS.PDF

This might find your scheme booklet.

Ftrafeai

Interestingly, I'm looking for a similar answer.
I think I need a tool that will help me plan my finance, and take into account future events, both expenditure and income, and will track these over time.
Do you know of anything that can provide such facilities?

Bigmoney2

Ftrafeai wrote: »

Interestingly, I'm looking for a similar answer.
I think I need a tool that will help me plan my finance, and take into account future events, both expenditure and income, and will track these over time.
Do you know of anything that can provide such facilities?

An excell spread sheet can be easily set up (assuming your familiar with it of course) and tailored to your own needs.

A good way to start is to log what your current expenditure is.
The big stuff is quite easy especially if bills are payed by monthly DD, then there is the annual stuff e.g. insurance, TV licence, roadtax /servicing, holidays/days out.
Then log what you pay for in cash, e.g. coffees, lunches, magazines. And what goes on the CC petrol, food, clothes etc.

This will give you a good idea where your money goes, where you can cut back, and what you waste.

Unfortunatly you do need to input the info yourself, and often to keep ontop of it.

Some banks offer a breakdown of spending if you use online banking, but won't tell you where your cash withdrawalls go.