Goal posts being moved

Lily1

Husband is currently in a final salary pension scheme, as of April 2016 this is closing and he will be moving to a Defined Contribution scheme.
He had planned to retire at sixty enabling him to collect a full pension under the old scheme. Due to our circumstances he still wants to leave at sixty but is not sure how it works as he will be classed as a deferred pensioner in the old BSPS.
Are these type of pensions locked until 65 or will there be a way of accessing them before that age? Forgive my ignorance everyone.

dunstonh

he needs to read the scheme booklet. This will tell him the scheme rules. There will be a section that covers the scheme retirement age and earlier retirement and any penalties that may exist.

As every scheme is different, the booklet is the best source of information.

atush

Hopefully as he isnt leaving work, but the whole scheme is closing, they will keep to the current scheme age of 60. As said, you have to check the information in the booklet and

If they dont (and even if they do) throw everything you have at the DC pension. Take that one at 60 and live on it until the DB pension pays out?

xylophone

It is likely that when the DB scheme closes, it will retain the scheme pension age of 60.

If this is the case, your husband would be able to draw his deferred benefits at 60 but of course this would be the benefits accrued up to the time the scheme closed, revalued to age 60.

With regard to the new DC scheme, if scheme pension age is 65, I imagine he might well have a choice of drawing those benefits with actuarial reduction at age 60 or leaving the benefits in the scheme and drawing them at 65?

Information about the new state pension here https://www.gov.uk/new-state-pension/overview

You might both wish to obtain a state pension forecast?

Lily1

Thanks for replies. Regarding the scheme being closed, the company seem to be changing the rules prior to its closure. One change will be a deduction of 5% per annum from age 65 instead of 60 when retiring early.
Regarding the DC scheme he will be joining this at 54, so only contributing for a max of six years. He will be paying in 6% his company 10%. I just wonder if it will be worth starting up a new pension for a few years.

xylophone

It is certainly worth his joining the new DC scheme - no point in losing the employer contribution?

atush

Join the New DC scheme (not DB obv) and throw everything at it? put in more than 6%.

Then take it at 60, leaving the other scheme untouched until you get to 65? If you are not working at all, you will be able to take the 25% TFLS then 11K per annum without paying any tax?

mgdavid

Lily1 wrote: »

.......
Regarding the DC scheme he will be joining this at 54, so only contributing for a max of six years. He will be paying in 6% his company 10%. I just wonder if it will be worth starting up a new pension for a few years.

Is it worth it?
Simple arithmetic, work it out.
After 6 years he will have a pension pot roughly equal to a year's salary and it will only have cost him half that, due to the free money from the employer's and taxman's contributions. How else can one double your money in 6 years?

kidmugsy

Lily1 wrote: »

I just wonder if it will be worth starting up a new pension for a few years.

This question is asked so often, but it's always seemed entirely lame to me. How could it not be worth it?