Deferred Pension statement

Gers

This arrived yesterday and shows a (miserly) CPI increase of 2.2%. as at September 2012. Last year it was 5.1%. Only really a comment.

Would appreciate a little piece of advice please.

1. I am eligible to receive this LGPS pension at the end of February next year. Would it be any point in deferring it until the next financial year - after the first week in April? Any financial benefit or does it not matter as I'd receive any increase anyway.

Pension numpty... the only good thing I've done with my financial life until a few years ago was to pay into a pension for over 30 years.

2. I assume that, as I aim to continue to work *not sure if full time or part time yet* I will pay more tax - will this be taken from my salary or from my pension? Or both?

If my pension takes me into the higher tax bracket I may consider taking the enhanced lump sum. I realise that almost everyone who is financially savvy would say it's a bad deal generally, especially as the rate is somewhat miserly.

In edit - am mortgage free and debt free apart from car loan which is interest free and not worth paying off from my capital. Learning!!

jem16

Gers wrote: »

This arrived yesterday and shows a (miserly) CPI increase of 2.2%. as at September 2012. Last year it was 5.1%. Only really a comment.

At least it's keeping up with inflation which my wage isn't.

1. I am eligible to receive this LGPS pension at the end of February next year. Would it be any point in deferring it until the next financial year - after the first week in April? Any financial benefit or does it not matter as I'd receive any increase anyway.

There would be no benefit at all and it would just mean you would lose 2 months of pension. Any increase due will still be given.

2. I assume that, as I aim to continue to work *not sure if full time or part time yet* I will pay more tax - will this be taken from my salary or from my pension? Or both?

Your work will continue to use your main tax code. Your pension will be given either a BR or D0 code so it will all be taxed at 20% or 40% depending on your total income.

If your main source of income does not already make you a higher rate taxpayer but combined they will, your tax code could be adjusted to take that extra tax and the pension would then have the BR tax code. You would need to give HMRC an estimated income for the tax year for this to happen.

If my pension takes me into the higher tax bracket I may consider taking the enhanced lump sum. I realise that almost everyone who is financially savvy would say it's a bad deal generally, especially as the rate is somewhat miserly.

You would probably be better taking the higher pension and putting the amount that takes you into higher rate tax into another pension. That would give you another bite at tax relief. If your LGPS pension plus state pension then gives you £20k or more secured pension, you would be able to take out all of that other pension as a lump sum using Flexible Drawdown.

Gers

Thanks for your advice and help. Will go away and digest it.

:T

PS. Just noticed that from 2010 - 2011 there was no increase in my pension benefits at all. Small mercies and all that.

PPS. As one of the 'trapped' females my state pension age is about seven years away!

jem16

Gers wrote: »

PPS. As one of the 'trapped' females my state pension age is about seven years away!

if you're turning 60 next February, it should be around June/July 2019 so only 6 years away. You're one of the luckier ones - I've got to wait until I'm 66.

Gers

jem16 wrote: »

if you're turning 60 next February, it should be around June/July 2019 so only 6 years away. You're one of the luckier ones - I've got to wait until I'm 66.

Oops!

At least I have my occupational pension to 'see me through'.

I did intend to stop working full time this year and just undertake consultancy work but am enjoying myself still so will probably just limp on for at least a year after I reach 60. Head feels 25, heart feels 18 and knees feel 80!


Thanks again.

jem16

Gers wrote: »

Oops!

At least I have my occupational pension to 'see me through'.

I'm the same fortunately. I plan to take my Teachers' pension no later than 60, possibly a year early. I have no intention of limping on - too many changes within teaching for my liking now.

Only 2/3 years to go!

patanne

I think the best way you can answer this is by asking yourself some questions. Such as, are you healthy, if you take your pension now will you get used to the extra lifestyle it could provide, if you postpone taking it till you retire or go part time what would happen to the annual income from the pension, if you take the larger lump sum what would happen to the pension income when you are no longer working. Remember you can be a very long time retired & the better the income the longer that retirement is likely to be!

Gers

jem16 wrote: »

I'm the same fortunately. I plan to take my Teachers' pension no later than 60, possibly a year early. I have no intention of limping on - too many changes within teaching for my liking now.

Only 2/3 years to go!

I left teaching in 2007 (deferred pension) as I just couldn't hack secondary schools anymore. Moved into FE and enjoying it much more. Limping was my oblique reference to my rotten knees which are giving me gip these days.

patanne wrote: »

I think the best way you can answer this is by asking yourself some questions. Such as, are you healthy, if you take your pension now will you get used to the extra lifestyle it could provide, if you postpone taking it till you retire or go part time what would happen to the annual income from the pension, if you take the larger lump sum what would happen to the pension income when you are no longer working. Remember you can be a very long time retired & the better the income the longer that retirement is likely to be!

I am fortunate in that I am healthy (knees apart and new ones could be in the offing) and, as an only remaining child there will be an inheritance to come my way in the fullness of time which,even as much I am not hoping it will be soon, cannot be more than ten years hence. As someone in my family said in his youth 'I have high expectations' :j

Most of my life has been spent without any financial stability or means and now I aim to make the most of the fruits of my labour.

jem16

Gers wrote: »

I left teaching in 2007 (deferred pension) as I just couldn't hack secondary schools anymore.

So is your deferred pension an LGPS or Teachers' pension? Or do you have both?

Gers

jem16 wrote: »

So is your deferred pension an LGPS or Teachers' pension? Or do you have both?

It's an LPGS one though I latterly worked for the same local authority in a secondary school. Teaching as (then) an non QTS so was able to retain the LPGS pension. Did PGCE and moved away into LLS.

When I left the secondary teaching post I took on a very part time employment with the same local authority in another capacity and so have another two year entitlement which doesn't kick in until 2019. It's under £250.00 per year with a very small (£650.00) lump sum - that won't keep the wolf from the door. Perhaps I can ask them to amalgamate them?

hyubh

Gers wrote: »

Perhaps I can ask them to amalgamate them?

You will unlikely to be able to - unless the employer has a policy otherwise (and most don't), you have to elect to combine within 12 months of starting the new job, and still be in it. On the other hand, if the rate of pay was less in the part time job, it wouldn't have been sensible to combine anyhow, given the final salary basis of the scheme (all your membership would have gone against the final pay of the later job).