Should I take voluntary redundancy and retire early?

kidmugsy

jamesd wrote: »

Since you'll be using the personal allowances that largely eliminates any reason to commence one or more of the defined benefit pensions early just for this reason.

True, but there are possible counter-arguments. (i) They may want to have a heap of capital available in personal pensions, rather than a higher (i.e. full) DB pension. (ii) They may want to diversify the risk of their two DB pensions being with the same scheme. (iii) They have children/grandchildren: they may wish to use the attractive new (but temporary? Who knows?) ability to leave pension pots on IHT-efficient terms. (iv) They may wish to have better terms for the widow/widower than just a 50% widow's pension; "inheriting" 100% of a DC pension pot might be more remunerative.

There's a lot to consider: several different policies might have the desirable effect of avoiding income tax but otherwise have different consequences.

jamesd

Yes, I agree that there can be other reasons than the personal allowance for wanting to start one of the defined benefit pensions earlier than normal retirement age. However, given the income loss for doing that, I think it'd be better to delay then invest the higher income if there's a desire to build up a pot for inheritance.

kidmugsy

And another possibility! There really is lots to consider.

ewor1958

It seems simpler to carry on working!

kidmugsy

ewor1958 wrote: »

It seems simpler to carry on working!

Heh! But the beauty of your position is that as long as you both get a pay-off you have a choice between different policies, all of which are attractive, albeit attractive in somewhat different ways. As long as you get good terms, and avoid lots of income tax, you're quids in.

jamesd

True about choices but you have only good things to choose between, so life is pretty good.

ewor1958

jamesd wrote: »

True about choices but you have only good things to choose between, so life is pretty good.

Agreed, thanks for the positive comments and all the advice everyone!

atush

Let us know what happens?

ewor1958

atush wrote: »

Let us know what happens?

Of course!
I'll probably be back with more questions soon!
I really appreciate the time and effort people have put into their responses.
Thank you.
:T:T:T

Domain.Rider

I haven't seen it mentioned yet, but it's worth confirming that the payout on your FS scheme doesn't change if you take it when it's deferred.

I was in a similar position some years ago at 55, and our FS scheme was due to be closed due to a company takeover. Considering early retirement, I asked for details of what pension I'd get if I retired before deferment and what I'd get if I carried on. It turned out that the formula changed on deferment, and if I retired after it closed, I'd lose out to the equivalent of over two years worth of contributions.

It was a no-brainer to retire immediately before the pension closed, and save working over three years just to get back to an equivalent situation (the new DB pension was nowhere near as good).

The difference in live and deferred formulas was not mentioned in the documentation, and the pensions administrator told me that they are not obliged to tell you such things unless you ask them (that may have changed).