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

smjxm09

Pension being enhanced after 60? BT have given me a figure for a pension at 65 years old . That would include any enhancement otherwise their figure would be wrong. I remember it was drummed into us at a retirement seminar, when we could still take a pension and carry on working that we should all take our pensions at 60. This was no doubt linked to the thinking that we would never get the money back in lost pension payments from 60.

robin61

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!)

II have spent quite a lot of time working this out. I guess everyone's figures are different but I am pretty confident that if I go at my target age of 57 then it would take me 20 years to start making a profit if I defered to age 60. By then I will be fast approaching 80 if I am lucky enough to live that long and even with the lower pension I will have a pretty good excess income over expenditure as I will be in receipt of the state pension as well. As long as you are not in danger of leaving you self short later in life there is a lot to be said for a bird in the hand while you are still young enough to enjoy the money you have worked hard for.

marlot

ExBT_Bob wrote: »

...

Assume payment up to 80yrs old (BT assume around 85yrs) and normal pension at 60 of £20k. Reduced pension at 55 of £15k for 25yrs = £375k, unreduced at 60 of £20K for 20yrs = £400k...

You then have to think about income tax.

If we assume this pension is the only income. The first 10k per year is tax free, and the rest at 20%. so at 55, net income is about 14k. at 60, net income is 18k. So the gap is reduced to 350k plays 360k

The exact position is different for each individual, of course.

madeinireland_2

smjxm09 wrote: »

Pension being enhanced after 60? BT have given me a figure for a pension at 65 years old . That would include any enhancement otherwise their figure would be wrong. I remember it was drummed into us at a retirement seminar, when we could still take a pension and carry on working that we should all take our pensions at 60. This was no doubt linked to the thinking that we would never get the money back in lost pension payments from 60.

I am agree but it was ex BT Bob that said it and everything else he has said was correct so just waiting for details from him really

madeinireland_2

robin61 wrote: »

II have spent quite a lot of time working this out. I guess everyone's figures are different but I am pretty confident that if I go at my target age of 57 then it would take me 20 years to start making a profit if I defered to age 60. By then I will be fast approaching 80 if I am lucky enough to live that long and even with the lower pension I will have a pretty good excess income over expenditure as I will be in receipt of the state pension as well. As long as you are not in danger of leaving you self short later in life there is a lot to be said for a bird in the hand while you are still young enough to enjoy the money you have worked hard for.

It is different for everyone but I have a wife much younger than me so long after I have gone I'm sure she will br drawing 50% of the pension for a long time - so I do need to think about that too.

robin61

madeinireland wrote: »

It is different for everyone but I have a wife much younger than me so long after I have gone I'm sure she will br drawing 50% of the pension for a long time - so I do need to think about that too.

Yes I agree and that might well change my decision if my wife was a lot younger than me.

Thrugelmir

marlot wrote: »

If we assume this pension is the only income. The first 10k per year is tax free, and the rest at 20%. so at 55, net income is about 14k. at 60, net income is 18k. So the gap is reduced to 350k plays 360k

Compound indexation widens the gap though.

Mr_Prudent

I suppose the only way we will know who made the better decision is by who is still around in fifteen to twenty years. Of course if you have a young wife to provide for this is going to affect your reasoning. Must say if I had a young wife it would probably shorten my life expectancy! (No offence intended)

ExBT_Bob

madeinireland wrote: »

I am agree but it was ex BT Bob that said it and everything else he has said was correct so just waiting for details from him really

You have to bear in mind that nothing can be garnered from future projected illustrations and that the only way you'll get a reasonably effective and accurate quotation at anytime from Accenture is to pick a date in 3 months time and ask for details of your pension if paid on that date. I think you can get 2 a year this way. Any future projected quote (from them) is at best, something from a world far, far away.

I'm not going to claim my pension (deferred in my case) any later than 60 either (in 3yrs time), but I'd stated that as far as I was told by Accenture the Pre April 2009 pension, that suffers no actuarial reduction after reaching 60, is actually enhanced each year it is not claimed afterwards.

As I say, it doesn't affect my plans as that's the time for me. Most of us here on this post have earned the majority of our pension on the pre April 2009 terms, with those on BTPS foolishly convinced that we had to accept the changes, and before someone suggested to Section B'ers that RPI should be hard-wired into the scheme rules. You all know my views on taking the pension early, which was the original post, but that's just for me. I'm not attempting to persuade anybody in a particular course of action, just making it clear upon what facts I have based my own approach.

BTW - Accenture like to tell us that it's ONE PENSION, when they are struggling to understand that it's made up of two significantly different parts.

If in doubt ask them the question yourself direct in writing and expect to make a number of responses before you get a clear answer :rotfl:

ExBT_Bob

ExBT_Bob wrote: »

Don't get me wrong - as a deferred member I would love it if every other member took their 25% reduced pension at 55, then BT and BTPS would benefit enormously!

The actuarial reductions are too high for it to make sense.

Assume payment up to 80yrs old (BT assume around 85yrs) and normal pension at 60 of £20k. Reduced pension at 55 of £15k for 25yrs = £375k, unreduced at 60 of £20K for 20yrs = £400k. Compound indexation over the period makes the gap even wider. (I don't see where I quoted 'giving up' but maybe that's correct).

Serious illness is a completely different matter with another range of options including immediate lump payment, transfer to SIPP for better inheritance, etc....etc

Forgot to add good old lump sum (for the pre-Apr 2009), so if reduced pension is £15K, lump sum is £45K, unreduced pension of £20K, then lump sum is £60K.