Taking early retirement. What next?

Legacy_user

When My husband turns 48 (2008) he will have completed 30 years in his profession (PSNI) and will be eligible to take early retirement as part of the Good Friday agreement. He will get a lump sum payment from his pension fund and a further payoff as agreed in the Good Friday Agreement. He will also receive a monthly pension. This is very nice but he will have 17 years to go before he receives his state pension and he does not want to sit on his backside doing nothing so will probably look for another job.

If he does get another job is it ok for him to contribute to another pension scheme or take out a private pension. I'm sorry but with him being in the same job for so long and not having to think about pensions were really are totally ignorant about what we/he can do to ensure a secure retirement.

We also have to think about the best, low risk way to invest his lump sum payments.

margaretclare

Hi

Don't know about NI or the Good Friday agreement, but my cousin retired from the UK police in his mid-40s and yes, you're right, someone of that age doesn't expect to sit around waiting to become 65.

My cousin took over his parents' smallholding, so he had a ready-made 'second career'. But I'm sure there will be opportunities for your husband to use his hard-earned 'people skills' in some other field.

Re saving for eventual retirement, a stakeholder pension scheme might be a good idea. This was an important innovation in that pension contributions could be made from unearned income and topped-up with a contribution from the taxman i.e. put in £78 and the taxman adds £22.

Best wishes

Aunty Margaret

DavidLaGuardia

Pam17 wrote:

We also have to think about the best, low risk way to invest his lump sum payments.

What do you want this lump sum to go towards? How far away is that objective? If it also for when he is 65, then some risk might be appropriate considering the time involved.

Pal

You can always join another employer's pension scheme or take out your own pension scheme while receiving benefits from an old one. If he works for the police again then he should double check whether he can rejoin. Chances are that it would be OK.

System

David our mortgage hopefully will be finished in 2008/09 so we don't need to worry about that. We have 2 daughters so hopefully there might be a couple of weddings in the future. But ideally we will want to be able to travel. I don't see us upping sticks and going abroad to live, I'm very much a home bird.
We might consider buying a holiday home and renting it out but by the time we are in the position to do that I think there will be a glut of those type of properties.

Another reason for him wanting another job is to pay National Insurance contributions for his old age pension. He will not be starting his own business, neither of us has a business brain so if we were even to consider that option we would be better standing on the street corner handing out his money to anyone who happened to pass by.

Margaret re the stakeholder pension do you have to be in employment to take one of these out and how risky is it? My reason for the last part of this question is having become one of the many people caught out by underperforming endowment mortgages I don't want to pump money into something that might ultimately be worth less than if it has been put in a savings account.

DavidLaGuardia

Pam17 wrote:

David our mortgage hopefully will be finished in 2008/09 so we don't need to worry about that. We have 2 daughters so hopefully there might be a couple of weddings in the future. But ideally we will want to be able to travel. I don't see us upping sticks and going abroad to live, I'm very much a home bird.
We might consider buying a holiday home and renting it out but by the time we are in the position to do that I think there will be a glut of those type of properties.

Margaret re the stakeholder pension do you have to be in employment to take one of these out and how risky is it? My reason for the last part of this question is having become one of the many people caught out by underperforming endowment mortgages I don't want to pump money into something that might ultimately be worth less than if it has been put in a savings account.

An esavings account may be a godd idea for shortterm stuff on competetive interest. This is probably better until your husbandand you have dedided your direction (and it may be different fromwhat you now anticipate, retirment can be a big change) If youwant a bit of no risk fun then Premium Bonds might be tried (the overall averagereturn is rubbish but it doesn't harm having arisk free gamble and farily accesible money)

As far as stakeholders are concerned everyone under 75 can put in £3,600 min a year irrespective of earnings (a net contributiuon of £2,808) higher amountscan be done if your earnings justify it and changs will occur from April 2006. On the subject of endowments let's dispel a myth here, most have performed very well. The reason they are not on target is because the original growth projections were based on a high inflation high return environment weare longer in and some of them were unrealistically high to keep the premium down, but very few people actually "lost" in terms ofwhat they paid in and got back including the life cover. Stakeholder pension funds are varied from low risk to shares. A mix of funds based on propery, shares and fixed interest could be a good idea moving to safer funds in the last few years (mny funds offer the latter option as a lifestyle choice)

margaretclare

Pam17 wrote:

Margaret re the stakeholder pension do you have to be in employment to take one of these out and how risky is it? My reason for the last part of this question is having become one of the many people caught out by underperforming endowment mortgages I don't want to pump money into something that might ultimately be worth less than if it has been put in a savings account.

Hi Pam

No, the stakeholder idea was a real innovation in that it was the first time ever that pension contributions could be made from unearned income and still have the taxman's top-up.

I started one a couple of years ago almost as soon as they started and I'm actually paying into it from retirement income. I'll soon be 70 and I plan to keep on with it until I'm 75. I pay in £78 a month which becomes £100 with the tax addition. I reckoned we might be glad of a little extra in 2010!

Mine is with Friends Provident and at present I have 25% of it in UK equity, 25% in cash, and 50% in property. So it's like a mixed portfolio. I also have an equity ISA and a cash ISA so I'm saving a total of £200 a month from retirement income. Just in case we need a bit extra as we get older!

Best wishes

Aunty Margaret

Cardew

Pam17 wrote:

Another reason for him wanting another job is to pay National Insurance contributions for his old age pension.

You can contribute to another company pension scheme without problem.

You do not necessarily have to have further employment to get your National Insurance contributions paid.

EdInvestor

One of the best ways of no risk/high return saving is to pay back your mortgage early.

frugal_dougal_3

Pam,

All the other UK polices forces offer their staff a pre-retirement course between 12-18 months before their retirement date is due. The purpose of this is to explain to them all about their options in relation to financial planning, tax and pensions etc and they are extremely useful. Most forces also allow spouses and partners to go along to.

Is your husband likely to be offered such a course? If not maybe he could find out about being allowed to join one in another force area across the water.

After being in one job for such a long time most people need a bit of help to re-adjust.

mrbnewc

Obviously your husband will do well from his Police pension, but if he is worried about his State Pension and doesn't take up further employment, it might be worth setting up a direct debit for Voluntary National Insurance Contributions. This will protect his basic State Pension.

NI Contributions office 0191 2135000 - they will sort it out for you.
:j