Advice regarding deferred Civil Service pension

GibbsRule_No3

I have a 23 year deferred final salary CS pension. What would I lose if I took it at 59 instead of 60? (assuming I am allowed to do this) I am still in employment with a new final salary pension that will be another 23+ years by the time I can take my state pension. I am female, single with no dependents and would like to have some fun before I can retire. If one year does not make much difference I would like to take it early.

jem16

It's usually about 5% for each year taken early.

Best contact them and find out.

http://www.civilservice.gov.uk/pensions/past-members

GibbsRule_No3

Thanks for the response. Another silly question is that -5% for just the year I take it early or -5% for each of the 23 years I have deferred? Obviously I might be tempted if it is just for a one year loss because of the enjoyment gained. It is the lump sum I'd really like to get my hands on early, so the pension part can be invested. 7 years more work until state pension age, another FS pension and still being paid for a one year loss appeals greatly, after 43 years non stop work so far.

jem16

GibbsRule_No3 wrote: »

Thanks for the response. Another silly question is that -5% for just the year I take it early or -5% for each of the 23 years I have deferred?

It's just 5% of your pension entitlement. So if you were due a pension of £10k, you would receive £9500.

NAR

The lump sum will also be reduced by 5%.

GibbsRule_No3

Thank you both. With those reductions I will certainly look into it. :beer: :T Make working those extra years a happier place.

jem16

GibbsRule_No3 wrote: »

Thank you both. With those reductions I will certainly look into it. :beer: :T Make working those extra years a happier place.

I suppose it depends on whether or not you think losing £1500 lump sum and £500pa (rising each year in line with CPI) is worth not waiting an extra year?

atush

You would (if still earning) pay tax on your pension at your highest rate.

So, if still working I can't think of a really good reason to take your pension early, lose 5%+, and pay more tax. Don't do it.

GibbsRule_No3

I don't earn much a year, as a single person I have no savings and could not retire at 60. So would take the CS pension and pay extra tax on that while still working after 60 anyway. Seems a small price to pay to at least have a life outside work for once in my life. My health must get worse in those extra 6 years. What I might do now is see if someone I know will advance me some money for a few months before June next year and I'll pay them the 5% or more, if they agree.