Early retirement at 55...help please

juju17

I would be grateful of any advice, as I have been trying to understand all the pension rules, but fear that more and more reading, just fuzzles my brain!, and I end up more confused.
My husband will be retiring in September at 55 (been a goal for a while, and physically he would find it too hard to continue) so this will be happening.
He is a member of section c pension and has been an employee of over 28 years, and has built up a small AVC pot of £20,000.
I am in receipt of my cs ill health pension, we have minimal outgoings, very mse, no mortgage, reasonable savings and company shares.
The plan was that he took a reduced pension at 55.
We went on the BT pensions portal and got what we thought was an estimate of benefits payable forecast, but now I am reading about GMP tests, and wonder if this would actually be an option? Should we ask the pension provider to do a GMP test?
I am now also wondering if he would be better deferring his pension to 60? If he did this, could he take a lump sum early at 55?...I,e, from the AVC pot?
I am also considering going to an IFA, as want to ensure that husband makes the right decision...would you advise this?
Any help would be much appreciated.

juju17

Please can anyone help?

xylophone

The best advice would be for your husband to contact the administrator of the BT Scheme and ask about his personal options.

If you type bt section c pension into Google, you will be able to download the pension booklet.

tigerspill

Has your husband been to any of the Wealth@Work seminars that BT organises? W@W understand the BT schemes in great detail.

I am also in SectionC and trying to work through the quagmire. I did call them and they told me you can take the AVCs earlier than the main pension. BUT I do not have this in writing so can't stand over it.

robin61

I have always thought that you had to take the AVC at the same time as the pension.

xylophone

http://www.btpensions.net/64/74/avc-questions


"Can I draw my AVC funds and continue earning a pension?

Yes, you can take you AVCs prior to your main scheme benefits, provided you are over age 55. For more information please go to AVCs."

juju17

Thanks for the replies.
Yesterday DH called Accenture (scheme administrators), and they said that if he is able to produce a forecast on the pensions portal, then it is 99% accurate, and it would not produce the forecast if he did not pass the GMP test.
He also noticed an email had come through earlier that day inviting him to a Wealth at work seminar, so he put himself on the list for that, which is later this month.
The portal produces 6 different pensions to choose from, so making the right decision is so important...obviously if we all knew how long we were going to live, this decision would be easier
We will wait and see what information he gets from [EMAIL="w@w"]w@w[/EMAIL], then we may still pay to seek advice from an IFA just for the reassurance that he makes the right choice as it is such an important decision.

robin61

xylophone wrote: »

http://www.btpensions.net/64/74/avc-questions


"Can I draw my AVC funds and continue earning a pension?

Yes, you can take you AVCs prior to your main scheme benefits, provided you are over age 55. For more information please go to AVCs."

Right I see that now. They don't appear to mention that in the AVC booklet. However if you do this only 25% will be tax free the rest is going to be taxable via an annuity or SIPP. I think most people who are investing in this plan to use it to boost their tax free lump sum without impacting their pension. But I guess it is an option and could presumably be used within a SIPP to fund early retirement and delay taking the pension to avoid the actuarial reduction. Although only an annuity is mentioned as an option one of the other questions does say SIPPs can also be used.

tigerspill

robin61 wrote: »

Right I see that now. They don't appear to mention that in the AVC booklet. However if you do this only 25% will be tax free the rest is going to be taxable via an annuity or SIPP. I think most people who are investing in this plan to use it to boost their tax free lump sum without impacting their pension. But I guess it is an option and could presumably be used within a SIPP to fund early retirement and delay taking the pension to avoid the actuarial reduction. Although only an annuity is mentioned as an option one of the other questions does say SIPPs can also be used.

But I believe it is 25% or the WHOLE BT Pension including the main DB part. I believe you can take all of the 25% tax free from the AVC part as it is actually part of the same pension.
Again, I only have this verbally from them, but if this is the case, it makes AVCs in this scheme very valuable. To me this is the big advantage over a SIPP.

juju17

tigerspill wrote: »

But I believe it is 25% or the WHOLE BT Pension including the main DB part. I believe you can take all of the 25% tax free from the AVC part as it is actually part of the same pension.
Again, I only have this verbally from them, but if this is the case, it makes AVCs in this scheme very valuable. To me this is the big advantage over a SIPP.

Tigerspill, you are correct...this is from the BT pension page
When I retire (or draw my pension) can l take all of my AVC funds as tax-free cash if it is within the 25% limit, or can I only take 25% of my AVCs as tax-free cash?

HMRC allows you to take 25% of the capital value of your total BTPS benefits, including AVCs, as a tax free cash sum, capped at a quarter of the standard lifetime allowance. For more information please go to AVCs.

greenglide

But it seems unlikely that you can get all of the AVCs tax free if you don't start the main pension at the same time.

Surely if you take the AVCs earlier you will be limited to 25% TFLS but then you could, possibly, take 25% of the main pension as TFLS as well even if the commutation rate may make it silly.