Early pension

Nearly_fifty_five

I have worked for a company for 17 yrs and the first 6 yrs I was paying into the superannuation pension fund . The company stopped this fund and started a defined contribution fund . I turn 55 in June and have made inquires into taking the superannuation pension which I am aloud to do . It's a lump sum off £4164 my avc lump sum off £3390 and a yearly pension off £738 . The question is should I take this now and invest it in isa or leave it and take it out when I retire . Thanks

jem16

Nearly_fifty_five wrote: »

I turn 55 in June and have made inquires into taking the superannuation pension which I am aloud to do . It's a lump sum off £4164 my avc lump sum off £3390 and a yearly pension off £738 . The question is should I take this now and invest it in isa or leave it and take it out when I retire . Thanks

Is there an actuarial reduction if you take it at age 55? What's the normal scheme retirement date for it?

Nearly_fifty_five

jem16 wrote: »

Is there an actuarial reduction if you take it at age 55? What's the normal scheme retirement date for it?

These were the quotes they gave me and said if I was interested in taking it at 55 I would have to let them know 3 mths before I turn 55 and they would give me a more accurate quote . The normal retirement date is when I turn 65 . What I was thinking off doing was taking it at 55 and invest it in isas then when I retire I would have the lump sum plus my yearly pension

jem16

Nearly_fifty_five wrote: »

These were the quotes they gave me and said if I was interested in taking it at 55 I would have to let them know 3 mths before I turn 55 and they would give me a more accurate quote . The normal retirement date is when I turn 65 .

The actuarial reduction for taking it early may well be 5%pa so you could be losing 50% of the pension through taking it early. You really should ask.

What I was thinking off doing was taking it at 55 and invest it in isas then when I retire I would have the lump sum plus my yearly pension

If you are losing 50% by taking it early, I really wouldn't think it is a good idea.

Are you talking about Cash ISAs or S&S ISAs?

Nearly_fifty_five

Was thinking about cash isa . Will have to inquire about that actuarial reduction because I've never even heard off actuarial reduction .

Nearly_fifty_five

Looked through my pension stuff and found an estimate for my retirement benefits for this pension and it is . Tax free lump sum £4845 avc lump sum £3340 and a yearly pension off £1147 . Date of retirement is June 2024

jem16

Nearly_fifty_five wrote: »

Looked through my pension stuff and found an estimate for my retirement benefits for this pension and it is . Tax free lump sum £4845 avc lump sum £3340 and a yearly pension off £1147 . Date of retirement is June 2024

Well you're not losing 50% but around 35% which is still a lot.

Putting it into a Cash ISA would be a terrible idea as it's going to suffer through inflation.

Really best to leave it until normal retirement date for the scheme.

Nearly_fifty_five

Thanks for the advise jem

mgdavid

...and unless you *need* a lump sum e.g.to pay off a remaining mortgage or other debt, it may be much better to forego the lump sum and have the higher annual pension. I would have expected you to have had both sets of figures given to you.

Nearly_fifty_five

Only got about £2000 left on my mortgage no more debt. Could do witha few holidays and I've had my Astra for 12 years but still a good runner

kidmugsy

Nearly_fifty_five wrote: »

The company ... started a defined contribution fund .

If you really want money out of one of your pensions the one to look at is the defined contribution scheme. Would you be allowed to leave the scheme and transfer the money into, say, a SIPP, and then be allowed to restart your membership again on the same terms you have now?

If that doesn't work, you could always ask your mortgage company whether they'd let you suspend payments so that you could finally clear it with a lump sum at age 65. Or even consider remortgaging until age 65 to release some capital.

Whether any of these is a good idea depends not only on how badly you'd like a holiday but also on how secure your job is.

"Tax free lump sum £4845 avc lump sum £3340 and a yearly pension off £1147" might leave you short of money in retirement. Have you asked for your official forecast for your State Retirement Pension?

Whatever you do, keep clear of companies that approach you promising to "release your pension".