Taking pension early...am I missing something?

Mr_Prudent

Hi. If Marine Life was in a pension similar to BTPS then could be entitled to a deferred pension any time after 50 depending on the date of joining. I have a similar predicament taking my pension 2 years early. I know all of the experts on this forum will always say not to take it early, but there are so many different variants regarding people’s personal situations, in the end you just have to do what feels right. After all what is the point in all that theoretical extra pension when in your 80’s if you’re eating soup through a straw and having your bag emptied twice a day and have no memory of anthing.I don’t think it will matter much to you how nice/dire your care home is!
Welcome to the early pension conundrum!!

Marine_life

atush wrote: »

I gotta say, you have been SO very prepared for retirement I am really really surprised this has not come up before? In your preparations?

I know, how could I have missed it ;-)

atush wrote: »

However, in all seriousness, you need to keep this preserved and not take it early.

Is there a specific reason why you say that. My thinking was that I have two income streams that will kick in in my 60's which collectively will likely take me into the higher tax bracket. Hence the pension would exacerbate that. By taking it early (when I will be living off savings) I will pay a lot less tax which means I would need to live a very long time before it the benefit of taking the pension later made financial sense (i.e. in my example above about 27 years)

atush wrote: »

Or you could, right now try to open a pension as a non earner( but given the time you have been out this might not be possible but will on your date of return) put in 2880 w year for each of you which will be boosted to 3600 by TR.

Or should either of you work at all, even casual/PT as long as is taxable income, if over 3600 your could put all your income into pension. Which could then be taken from age 55 to help you stave off taking that DB pension early.

I'll need to think that one through but I suspect you are right.

Thanks for your input.

vm2pensioner

Just check that the 5% p.a. increase would apply immediately in the case of early retirement - some schemes will delay an increase until the original retirement age is reached.

taking_stock

i'd be very surprised if the 5% is applied every year rather than the maximum indexation. for someone living 30 years in retirement it would quadruple the payment in absolute terms.
which scheme is it?

Daniel54

The older of my two private sector DB pensions increases by 5% per annum in payment,so whilst this is unusual it is quite possible for the OP.

Since the Government allowed pensions to increase by CPI ,most have moved to this and that is a point worth checking.

i have not taken mine early because a) I am still working as a higher rate tax payer and b) until the extremely ( unusually ?) low level in inflation, the crossover point was much sooner.

So a lot does depend on inflation assumptions

Marine_life

Mr_Prudent wrote: »

After all what is the point in all that theoretical extra pension when in your 80’s if you’re eating soup through a straw and having your bag emptied twice a day

What a lovely vision!

But your point is well made and I think its an important one i.e. I expect my income needs to drop as I get older and therefore the sacrifice has less and less value.

To others who have responded on the 5%. Clearly this is a key point and therefore I will send a note to the provider to check.

Thanks for the taking the time to answer

Marine_life

taking_stock wrote: »

which scheme is it?

It sform one of the large professional services firms

atush

I had quite forgotten you will be a HRTax payer later in retirement. But still, i hate to see pensions actuarily reduced IF there are other options.

Seems such a waste of money to me?

kidmugsy

atush wrote: »

I had quite forgotten you will be a HRTax payer later in retirement.

There's no need to pay HRT in retirement while VCTs and EISs are available.

Marine_life

atush wrote: »

I had quite forgotten you will be a HRTax payer later in retirement. But still, i hate to see pensions actuarily reduced IF there are other options.

Seems such a waste of money to me?

I don't disagree (about hating to waste money) - but I reran the calculations this morning assuming that I will be taxed at 20% prior to getting my pensions and 40% thereafter and the 'catchup' period came in at 26 years.

The chances of my living to 89 are quite slim and I suspect by that time I will not care about money (or probably will not know whether or not I care!).