BT pension- Aged 57, take it now or defer?

madeinireland_2

ExBT_Bob wrote: »

Of course the final decision is yours - it's your pension! I still fail to understand why anyone - unless they have minimal savings - would want to accept an actuarial reduction to their hard earned pension for life.
I'd be interested in reading your calculations as it isn't feasible that the actual outcome would 'be the same', as the actuarial reduction reduces over the next 2yrs (and beyond).
(In fact if you left it even longer, your Pre Apr 2009 portion actually gets enhanced after age 60 - although I won't personally be contemplating the latter of course!)

Hi - can you explain further about the pension being enhanced after 60 - I thought the pre care portion only went up by CPI after 60 and the advice I have is that it's best to take at 60 since the majority of my pension would be pre care and at that point the actuary reduction benefit of continuing to defer would only apply to the post care part.

Thanks...

ExBT_Bob

The actuarial reduction is for an early payment (pre 60 for April 2009 and pre 65 on your post April 2009. If the majority of your pension is comprised Pre Care then if you defer until well after 60, you are paying BT to hold your pension, as your pre CARE will not be actuarially reduced anymore, but it is NOT Actuarially enhanced if you don't take it (at 60). Normal Sep CPI only each Apr

madeinireland_2

Where did you get the note from ? I'd like to know more about that.

Thanks...

smjxm09

OK here are my facts based on 31 years, 233 days pre 2009 service (31.64 years) and 5 years 274 days (5.75 years) post 2009.

Final salary £32635
Post 2009 Care figure £2250.50

BT figures:

Pension if took on 10th January 2015 £12,697.31 lump sum £38091.95 pa at age 57 264 days.

Pension at 65 £15,156.69 lump sum £45,470

My figures checked by the brains of my ex-company who teaches maths part time at collage.

Pension at 59 = 13,719.77 lump sum £41,159.31
Pension at 60 £14,562.87 lump sum £ £43,688.61

Now = £1023.15 per month after tax
59 = £1091.31 per month after tax
60 = £1147.52 per month after tax
65 =£1187.11 per month after tax.

The above is based on a personal allowance of £10600

Note the difference of only an extra £39.59 for a 5 year delay between 60 and 65. It is complete madness to delay the pension past 60.

Pension at 59. £68 per month better off than taking it now but lost £12,227 in pension payments up until that date after allowing for the increase in lump sum. 12227/68 = 179 months to breakeven. After 179 months have past from age 59 I will be £68 per month better off

Pension at 60. £124 per month better off than taking it now but lost £22,024 in pension payments up until that date after allowing for the increase in lump sum. £22021/124 = 177 months to breakeven. After 177 months have past from age 60 I will be £124 per month better off.

Pension at 65. I would be in my 90's to breakeven.

I have now decided to wait until I am 60 until I take my pension in the hope that I make it to around 75.

mgdavid

smjxm09 wrote: »

.....

I have now decided to wait until I am 60 until I take my pension in the hope that I make it to around 75.

look after yourself, be happy, aim for 90 :-)

Mr_Prudent

Hi smjxm. Your figures are so close to mine I could have posted this myself!! From your details I reckon you must be a TO (technical officer), I hate the “android like” title of C3 that was inflicted upon us when all the regrading was introduced. I am still thinking of taking my pension a couple of years early as I have seen too many retired colleges “conk out” far to early. Maybe it’s just that way in my part of the country. Still a lot of soul searching as to whether you make the right decision or not, but once made, don’t look back, just enjoy your retirement!

madeinireland_2

smjxm09 wrote: »

OK here are my facts based on 31 years, 233 days pre 2009 service (31.64 years) and 5 years 274 days (5.75 years) post 2009.

Final salary £32635
Post 2009 Care figure £2250.50

BT figures:

Pension if took on 10th January 2015 £12,697.31 lump sum £38091.95 pa at age 57 264 days.

Pension at 65 £15,156.69 lump sum £45,470

My figures checked by the brains of my ex-company who teaches maths part time at collage.

Pension at 59 = 13,719.77 lump sum £41,159.31
Pension at 60 £14,562.87 lump sum £ £43,688.61

Now = £1023.15 per month after tax
59 = £1091.31 per month after tax
60 = £1147.52 per month after tax
65 =£1187.11 per month after tax.

The above is based on a personal allowance of £10600

Note the difference of only an extra £39.59 for a 5 year delay between 60 and 65. It is complete madness to delay the pension past 60.

Pension at 59. £68 per month better off than taking it now but lost £12,227 in pension payments up until that date after allowing for the increase in lump sum. 12227/68 = 179 months to breakeven. After 179 months have past from age 59 I will be £68 per month better off

Pension at 60. £124 per month better off than taking it now but lost £22,024 in pension payments up until that date after allowing for the increase in lump sum. £22021/124 = 177 months to breakeven. After 177 months have past from age 60 I will be £124 per month better off.

Pension at 65. I would be in my 90's to breakeven.

I have now decided to wait until I am 60 until I take my pension in the hope that I make it to around 75.

I'm glad you have seen sense. I also will be taking pension at 60 for precisely those reasons although ex BT Bob says the pension gets enhanced somehow after 60 for each year of deferment so I await his response to my previous post about where that info comes from.

madeinireland_2

Also how did you calculate your pension worth for future years ? I hope you did not use the BT planner for that as it only gives the figure for those ages if you continue to work till those ages.

smjxm09

Grade C2

The starting point was a letter from BT that stated that I would get a pension of £15,157 at 65 which was sent to me 12 days after I had left.

On the pension portal it has annual benefit statements going back several years. Around May or June it will give you a figure for March 31st 2015 if you left the company on that date and deferred the pension until 65. My last statement which can be safely ignored showed that on March 31st 2014 my pension would be £14,512.35.

My calculation for 60:

31.64 years/80 x final salary= £12906.

You can work out what you will get post 2009 because you have been told your total pension at 65.

Total pension at 65 is £15157 therefore the post 2009 pension is 15157 – 12906.50 =£2250.50.

The actuarial reduction post 2009 pension is £2250.5 x 0.736 = £1656.37 as I would be taking this part of the pension 5 years early at 60.

The 0.736 comes from the the actuarial reduction table as emailed to me by the pension people which shows % figures so this was converted to a decimal.

Looking up the post 2009 table and taking the pension 5 years early is a reduction of 26.4%. 100% - 26.4% = 73.6% divide it by 100 to get 0.736 and then multiply. It saves working out 26.4% of 2250.5 and then taking it away from 2250.5.

Total pension at 60 = pre 2009 pension + post 2009 pension
£12906.5 + £1656.37 = £14562.87

madeinireland_2

Looks good to me and the actuary reduction figure used matches with what I was told a while back as I posted earlier in this thread.

Good luck - just need to understand what ex BT Bob was saying about the pension being enhanced after 60.