Should I stay or should I go?

jonperry64

That's good news. It was your first response to my original post that made me think that the index linking stopped when you started to draw the pension. If the amount you receive is index linked from whenever you start to draw it until you die why does would it impact on your decision to retire early as implied in your first post in this thread. By the way I appreciate your continued input.

kidmugsy

jonperry64 wrote: »

It was your first response to my original post that made me think that the index linking stopped when you started to draw the pension.

I can't for the life of me see how you made that inference.

jonperry64

kidmugsy wrote: »

I can't for the life of me see how you made that inference.

I'm sure it is down to my ignorance about these matters but it was this phrase:

"What's the index-linking promised on your pension? If it were an uncapped link to RPI, then in your shoes I'd be loathe to give it up. If it's a link to CPI capped at 2.5%, I'd reckon the link to be much less valuable, and so be less worried about giving it up."

I can see that an uncapped link to RPI is preferable to a link to CPI capped at 2.5% but, if the pension is index-linked regardless of when it is drawn I don't understand how the RPI/CPI issue would affect my decision to take early retirement.

kidmugsy

jonperry64 wrote: »

I can see that an uncapped link to RPI is preferable to a link to CPI capped at 2.5% but, if the pension is index-linked regardless of when it is drawn I don't understand how the RPI/CPI issue would affect my decision to take early retirement.

I see your point. Mine was that the an uncapped RPI link (for example) makes the pension worth more than a capped CPI link does, so I'd be more reluctant to give up that advantage after break-even, since it would be a bigger advantage. I'm now less confident of this logic, but I can rescue it.

Suppose I conjecture (plausibly perhaps) that we're in for a sustained spell of deflation finally to be followed by pronounced inflation - in particular, suppose the return of inflation happened after a generation; you would be about 75 i.e. you'll have reached break-even. Then you might be especially vexed to have drawn the pension early.

Mind you, in your shoes I'd be mighty tempted. How wonderful to be able to pocket a pension at 51.