Early retirement at 47!

Peter333

Just really curious about something.

One of our neighbours moved in to a bungalow near us last year with her husband, and when my wife asked her what she did for a living, she said she took early retirement several years ago. But she is only 50!

She said she worked for the local authority in the town she was in, from age 16 to 46. At 42-ish she got diagnosed with a chronic illness, and she was having time off work a lot because of the pain.

So at 46, she looked into the pension she had had with the local authority since she was about 20, and decided to take it 13 years early at the age of 47. She said it was a 'final salary pension,' but taking it 13 years early, means she gets about half of what she would have if she worked til 60. (So she gets £150 a week instead of £300 a week for example.)

She said the opportunity was there, she needed and wanted to finish work, so she retired at 47. (Her husband works full time.)

Is this possible? Or is she making it up? My friends at work are divided. A couple say it is possible, and a couple of others say she could not do this.

Please don't say 'wassit gotta do with your wife or you?!' We are just curious if this can be done. And if she could have retired at 47!

hyubh

Peter333 wrote: »

She said she worked for the local authority in the town she was in, from age 16 to 46. At 42-ish she got diagnosed with a chronic illness, and she was having time off work a lot because of the pain.

So at 46, she looked into the pension she had had with the local authority since she was about 20, and decided to take it 13 years early at the age of 47.

Ill health retirement - there are three tiers, and it's not just a matter of the individual 'deciding' to have one:

http://www.lgps.org.uk/lge/core/page.do?pageId=102182

ukjoel

Yes its possible.

Footballers and Rock stars can access pension at a really young age like 35.

Peter333

hyubh wrote: »

Ill health retirement - there are three tiers, and it's not just a matter of the individual 'deciding' to have one:

http://www.lgps.org.uk/lge/core/page.do?pageId=102182

What if she didn't have a chronic illness? Is it still possible to have your pension 13 years early?

She never mentioned finishing with ill health at all. She just took her pension 13 years early. Her work was getting her down and she said as she has a chronic illness now, she will retire at 47.

atush

it is not possible to have your pension earlier than the trustees allow.

but if allowed you can, even if it is severely reduced.

In this case, the person mentioned might have had some sort of ill health retirement, or their scheme had a reserved age to retire?

greenglide

No. The LGPS doesn't let you take your pension at age 47 unless you have a medical condition irrespective of how much actuarial reduction you accept.

Simply a matter of how serious the medical condition is.

hyubh

Peter333 wrote: »

What if she didn't have a chronic illness?

You just said she does!

Is it still possible to have your pension 13 years early?

The normal retirement age in the Local Government Pension Scheme (there is no other scheme for local authority workers) was 65 from the 1920s to April this year, albeit with a right to unreduced benefits at age 60 depending on length of service for much of that period (the ability to earn this right was taken away from new entrants in 2006). Given what you say, your neighbour would have easily qualified for an unreduced pension at 60, and even if she didn't, she could draw her pension at that age with 'actuarial reductions'. Nevertheless, this doesn't mean she could retire before 60 - for that to happen there would need to be special circumstances and employer consent.

One way is to be made redundant; however, early retirements through redundancy in the LGPS have tracked general pension legislation with respect to the earliest age a person in good health can draw a pension. As such, that age is currently 55, though it was 50 some years back. 50 is still over 47 however! By a process of elimination, we are therefore left with the ill health retirement option since ill health retirements in the LGPS are unrestricted by age.

mgdavid

Peter333 wrote: »

........But she is only 50!
She said she worked for the local authority in the town she was in, from age 16 to 46. At 42-ish she got diagnosed with a chronic illness, and she was having time off work a lot because of the pain.

So at 46, she looked into the pension she had had with the local authority since she was about 20, and decided to take it 13 years early at the age of 47. She said it was a 'final salary pension,' but taking it 13 years early, means she gets about half of what she would have if she worked til 60.........

Peter333 wrote: »

What if she didn't have a chronic illness? Is it still possible to have your pension 13 years early?

She never mentioned finishing with ill health at all. She just took her pension 13 years early. Her work was getting her down and she said as she has a chronic illness now, she will retire at 47.

Why appear to contradict yourself? You gave a fairly detailed sequence of events in post #1 which you now deny?

jamesd

The reason she could do this is the chronic illness. HMRC rules permit taking an ill health pension at any age provided these conditions are met:

"You must:

have left your job
be incapable of carrying out that type of job due to physical or mental illness
continue to be incapable of carrying out that job due to your ill health until your normal expected pension age - your scheme administrator must get evidence from a doctor confirming this

If you don't meet these conditions any payment made before you're 55 - or your earlier protected pension age if you have one - will be an unauthorised payment"

While explaining one thing that many people don't know it's perhaps also worth explaining that it is possible to get the whole value of a pension pot, or the whole transfer value of a defined benefit pension pot, as a tax free lump sum at any age provided you haven't started taking anything from it yet. You don't want to use this feature because it is available only to those whose doctor says they have a life expectancy of one year or less. This is called a serious ill health lump sum payment. If the defined benefit pension at a job doesn't provide this, it's one of the situations where a transfer from defined benefit to personal pension can be done to allow the option to be used after that transfer. See the topic terminal illness and pensions if you're curious about what people get told here if that happens to them.

Beyond those cases, anyone can retire as early as they like if they accumulate enough money to live on until they can take enough pension income and to top that up as required until they reach their state pension age.

Please pass on that HMRC URL to those at work who doubt this. It's part of the education task of this place to help people to know that there are good options for pensions if bad things like long term ill health or fatal illness happen to them.

brewerdave

15 or 20 years ago,"ill health" pensions were used by a lot of employers instead of sacking/redundancy - the major international company I was then working for, certainly made good use of the pension fund - we even got rid of a guy in his late 30s on ill health grounds -he is still working elsewhere to this day!
I believe that the practice has largely ended as the pension funds have got less spare cash & tighter controls in place!

System

Hiya

There are slides on www

pensionpage __webspace__ virginmedia__ com/

called SExSY Slides (the acronym is ServicE times SalarY)

that give the 3 types of ill-health, DEATH is the 4th type, that the LGPS had.

It may explain to you the nature of her retirement.

Incidentally I came across a record for man in his mid-twenties who quailified, and at the age of 24 had over 40 years service to his credit and ill health retirement pension.