Wait for payrise before taking pension?

littlelad

Is it really worth hanging on for a nationally agreed payrise (likely to be 1%) to be implemented before retiring or does it not make much difference in a final salary scheme.

atush

I imagine it makes 1% difference lol. What that means to you will depend on your salary/outgoings.

And, as I assume this is a FS pension, if you are taking it early/reduced- every year you wait will mean a lot more cash in your pocket- more than the salary increase would bring.

littlelad

Thanks, but what I am not sure about is would the FS be based on the full year at 1% more or a just a couple of months at 1%?

opinions4u

Worth looking at what your pension will be. When they apply increases and whether or not those increases are bigger than the pay rise you'd have been waiting for.

In the great scheme of things, there won't be much in it in most cases.

CLAPTON

it will only make 1% of a few months

however depending upon how inflation linking works you may be better going earlier

Thicko2

It may well also depend on the details of your specific pension scheme.

In most of the public sector for example, pensionable pay is often best of the last 3 years. These are then inflated by CPI, not now RPI sadly.

Many of us (in public and private have had no payrises for the last 4 years or 1% at most). Hence our pensionable calculation can be higher than actual last year of pay.

So hanging on for 1% payrise may make no difference to your pensionable pay level but the extra time may well generate extra qualifying years.

littlelad

Thanks, mine is based on final year's salary in LGPS. My OH's scheme is best of three years so, as you say, his pensionable calculation is higher than his current.

hyubh

littlelad wrote: »

Is it really worth hanging on for a nationally agreed payrise (likely to be 1%) to be implemented before retiring or does it not make much difference in a final salary scheme.

It's unlikely to make much of a difference, but the question cannot be properly answered without (a) knowing the scheme (the rules for determining the pay used for calculating pension benefits differ) and (b) what your pensionable pay was like in previous years - e.g., did you receive any pensionable 'extras' beyond basic pay? The latter could be relevant if it's the LGPS, given it is possible a 1% rise in your final year would actually make things worse - reason being, that scheme has a 'best of last three' protection that is calculated ignoring PI (*), however if applicable (i.e., it's the penultimate or third from last year's average pay used), you get the benefit of PI when the pension comes into payment - and PI has been running at rather more than 1% recently.

(*) PI = Pensions Increase = uprating by the consumer price index (CPI) at present.

Drp8713

If its LGPS it would be the 12 months immediately prior to your datebof leaving eg

1/5/13-31/3/14 @£20000/12x11
1/4/14-30/4/14 @£22000/12x1

So you would need to work a whole yeah to benefit fully

atush

Also you haven't said if you are retiring early or not?

littlelad

atush wrote: »

Also you haven't said if you are retiring early or not?

I would be leaving at 55 but deferring pension until 60 (early of course as scheme date will be 66). OH has already worked past his scheme retirement date of 60; he is 62.