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Don't know what to think about this attitude

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Comments

  • hugheskevi
    hugheskevi Posts: 4,207 Forumite
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    the cs classic scheme is reduced by 5% for each year below the retirement age - currently 60 - to be sp age from apr 2015

    its a 25% reduction if you take it at 55 - this is because you'll be getting 60 payments mare than someone retiring at 60

    It is a only 5% for people retiring up to a few years before Normal Pension age.

    Someone retiring at age 55 would have a 22.1% reduction, and someone retiring at 50 would have a 37.3% reduction (based on a Normal Pension age of 60).

    Source here.
  • atush
    atush Posts: 18,731 Forumite
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    lvader wrote: »
    Are you taking into account tax allowances, drawdown, recycling etc?
    I'm planning to retire at 55 but I'm not expecting anywhere near the drop you are talking about.

    As said I was talking about THIS specific pension that has a NRA of 65, with a 6% per year actuarial reduction so 6x10 = 60% reduction to take the pension age 55.

    So, only 4K of every 10K of the pension= brutal reduction for the live for now brigade.
  • lvader
    lvader Posts: 2,579 Forumite
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    Yes sorry I'd missed that very important point. I thought it was a general warning against retireing at 55!
  • atush
    atush Posts: 18,731 Forumite
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    Well, i do have a general warning about retiring at 55.

    Fund it out of savings to stop or reduce actuarial reduction of pension, and consider your spouse and go out 3 days a week as you might driver her bonkers. Take up golf if you haven't already.

    55 is far too young to actually retire (as you might live another 40 years), but isn't too young to take up another more enjoyable occupation or perhaps rewarding voluntary work (even if just part time).

    Not an age to sit around the place cluttering it up.
  • lvader
    lvader Posts: 2,579 Forumite
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    If you are going to retire at 55 wouldn't it be more tax efficient to make the most of income tax allowances and draw a pension income rather than just using savings?
  • atush
    atush Posts: 18,731 Forumite
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    Not if you are reducing your pension for the next 40 years by 25% or more. Also in the case of a Very early retirement, part time work would take up the slack in an allowance.
  • hugheskevi
    hugheskevi Posts: 4,207 Forumite
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    If you are going to retire at 55 wouldn't it be more tax efficient to make the most of income tax allowances and draw a pension income rather than just using savings?

    Not just income tax allowances, but also using permissible levels of recycling of pension commencement lump sum (if there is an automatic lump sum, or if commutation factors are reasonable).

    I may well draw my DB pension very early, crucially depending on the terms offered.

    The key problem is that it is difficult to plan to do this with any degree of certainty, as the actuarial reduction factors which determine the terms offered will only be known shortly before you are of an age at which the pension can be commenced.

    But if you have a decent range of investments for retirement (ISAs, SIPP, DB pension) etc, you are in a much better position to take advantage of possible opportunities should they arise and just sit and wait if they don't.
  • dunstonh
    dunstonh Posts: 117,905 Forumite
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    Hal17 wrote: »
    My wife is being made redundant in 2 months time. She is getting around £13K and at the moment we do not need the money for living expenses etc. She has a small pension pot of around £28K and is 57 years old. We were thinking should she put this £13K into her pension allowing for the 20% tax contribution which some people tell us is free money.

    Really not sure what to do - I expect its all to do with life expectancy
    etc. Would appreciate any thoughts please.

    Best to ask on your own thread and not post your unrelated subject on this one. It is known as thread hijacking and isnt fair on the original poster as your subject may take over their thread. even if it doesnt take over the thread, it can be confusing to have multiple conversations going on in the same thread. Copy and past your post into your own thread and people will answer.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
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