Pension at 55 whilst still working.

mrg9999

I have a frozen final salary pension of 31 yrs, and a new money puirchase pension.
I know colleagues who took retirement, and draw their final salary pension, and then come back as contractors.
What are the drawbacks to this? can the company stop me from drawing a reduced pension. some colleagues had the pension with no actuarial reduction

Is there a table of averages for pension and how much you need to live on.

The three people I've asked, all say that £12000 PA income is ample. We are all married, mortgage free, with no dependants.

xylophone

Do you have the DB pension scheme booklet?

What does it say about drawing a pension before scheme retirement age?

kidmugsy

mrg9999 wrote: »

£12000 PA income is ample. We are all married, mortgage free, with no dependants.

£12k, for a couple? Awfully tight. £12k each, maybe.

mandragora_2

Do your scheme details say anything about 'phased retirement'? That might be an option worth looking at - in teachers' scheme, if you reduce your responsibilities and/or hours so your pay drops by 20% or more, you can begin to claim your pension as long as you do it within three months. There's an actuarial reduction, but you have some of the benefits of partial retirement with the security of continued employment. The trick is persuading your employers to allow you to do this - I guess it varies on a case by case basis, but there's the statutory right now to ask for your employers to consider any request for p/t working seriously, though they aren't required to grant it.

Linton

A first estimate of how much you need to live on when retired is how much you are living on now minus anything that wont be relevant eg mortgage.

Are you living on £12K happily now?

When I took early retirement/redundancy the company made it a condition that leavers didnt come back as in the past that situation had caused grumbles from the staff that remained.

greenglide

When I took early retirement/redundancy the company made it a condition that leavers didnt come back as in the past that situation had caused grumbles from the staff that remained.

And my employer has taken several back, albeit with an inferior benefits package, 12 months after voluntary redundancy.

I am less than impressed on many levels.

suse*

Only you can figure out how much you need really. It all depends on the sort of lifestyle you want.

What are your bills now, car, petrol, heating etc etc. If you think the petrol prices have gone up 40 odd pence in the past 15 years, how much do you bet they will go up in the next 20 odd. If 12k covers all your bills today then what do you plan to do when you retire? Do you want to travel a bit? Do some expensive hobbies or just be trapped at home watching telly all day.

No one can answer your question 100% as what you need but just think how much things cost 10 years ago and they will only go up. Depending how healthy you are you could live another 50 years. What about care home costs etc? Do you want the council care home, or the bupa version or just having care at home which can be thousands currently. Do you have any kids you want to leave some cash to and how will that work? If you have lots of grand kids and they all move to different bits of the uk or even further away do you have enough to go visit?

What about if the boiler goes, or you need a new roof or car, do you have other emergency fund savings and how long will they last.

Have a play with a calculator like this to give you an idea of the kind of fund you need to start saving asap. https://www.hl.co.uk/pensions/interactive-calculators/pension-calculator

You need to think about maxamising your tax savings now and then leaving the pensions as long as you can before you take your 25% tax free. Then how you will in turn invest that money to get the most from it. With the changes coming in as well deciding on if you just take the cash and pay tax each year or get an anuity depends on guessing how long you think you'll live and making sure whoever out lives the other still can survive ok alone.

How many years NI do you have as well. You need 35 years for a full state pension and you can get a statement for how you're doing towards that here.

https://www.gov.uk/state-pension-statement

It is all a bit scary once you start to think about it, but at least you have time to start planning this better, and making the most of every penny you earn now to max out your savings and pensions to give yourself the best chance.

*update* sorry just saw no dependants bit, so just relace the kids / grand kids bit for friends and their kids.

atush

Find out how much your DB pension will be reduced for taking it 5-10 years early. Most likely 25-50%.

Then add that pension to your current salary to see how much it will be taxed.

Generally speaking, it is foolish to take a DB pension early/reduced while still working and you don't need the money.

Take it later when it is worth more, and you wont pay as much tax on it.

mrg9999

xylophone wrote: »

Do you have the DB pension scheme booklet?

What does it say about drawing a pension before scheme retirement age?

It says at their discretion.

C_Mababejive

A similar thing happens where i work. People are retiring at 55-60,taking their pension then being re-hired the following week via a third party contractor. One or two lads got caught out and ended up getting tax bills as their pension plus their new income as a contractor pushed them into the next tax bracket for PAYE. I wonder if there are ways of mitigating this?