Thoughts on our early retirement plan

Triumph13

enthusiasticsaver wrote: »

All the projections I have are based on us retiring at 60. If at all possible we may defer drawing on my DB pension but if we retire tomorrow or any time before 60 I am assuming the pensions will be reduced by 5% for each year early so that would be 15% for my OH and 20% for me and we don't want to do that. I would rather have too much and can gift money to our children or take additional holidays etc. I will look at paying more into my DB pension as this seems to be the general advice. I will have sufficient NI contributions for a full pension and my last statement was 2012. I will get another one next year.

If you were going to retire earlier then that would probably be best achieved by living on savings for a few years rather than taking the DB schemes early. And if you can recycle them through a DC scheme first for tax relief then so much the better.
As regards the state pension though, you may both have enough NICs for the existing state pension, but what about the new one? With those DB schemes you may have large contracted out deductions which would make your foundation amount just be the full current pension. If so then each year's NICs after April 2016 would be worth about £225 a year for life each - so as long as they don't put the prices up some voluntary NICs post retirement could be a very good investment.

enthusiasticsaver

xylophone wrote: »

You left Barclays with a deferred pension which included GMP. There was also an excess?

You mention that it is revaluing in deferment by 8% but I am assuming that you mean either 8.5% or 7.5% - see here

https://www.barnett-waddingham.co.uk/comment-insight/blog/2014/08/18/what-is-a-gmp/

Did you leave employment with Barclays before or after 6 April 1988?

When your pension comes into payment at age 60, Barclays has no obligation to pay you any inflation linked increases on the pre 88 GMP or anything in excess of 3% on post GMP - any revalued excess should increase by scheme rules.

It appears that Barclays makes a reduction to scheme pension at State Pension Age. See post 43

https://forums.moneysavingexpert.com/discussion/comment/62875440#Comment_62875440

That is very helpful thanks. It is 8.5% and I have checked my spreadsheet where I calculated the inflation linked increases. I left in 1986 after 9 years service but it has been quite difficult to get any information from Towers Watson, the Barclays administrators but I have a letter saying it is deferred and subject to 8.5% increases until it pays out. I was told the reduction at SPA may happen but it depends on the government rules at the time so I am expecting that to happen.

chiram2015

Hello and well done on achieving an early retirement. It takes a lot of hard graft and sacrifice.


Our personal situation is not too dissimilar to yours but unfortunately we do not have the same amount of belt and braces DB pension as you! Just to let you know of a free online retirement planner that we use called LifePlan by Retireeasy and I think a few of the posters on these boards also use it and like it. Specifically, we have been able to plug in a series of cash gifts for both the kids and the grandchildren in future years to see how this affects our future cash and most importantly if there is enough left for us should be survive past 90!

xylophone

been quite difficult to get any information from Towers Watson, the Barclays administrators

When you have a spare day or three, read through the thread in my previous......:)

xylophone

As a female, your scheme pension age and GMP age are the same - presumably you do have a statement showing your GMP and excess at date of leaving the scheme?

chiefie

If I already have 35 years ni and have been contracted out (and so my sp would be £115 per week) will I really get another £225 p.a. For every years contribution after 2016 ? Or is it just really an extra £52 ?

atush

chiefie wrote: »

If I already have 35 years ni and have been contracted out (and so my sp would be £115 per week) will I really get another £225 p.a. For every years contribution after 2016 best ? Or is it just really an extra £52 ?

Best to start your own thread

Triumph13

chiefie wrote: »

If I already have 35 years ni and have been contracted out (and so my sp would be £115 per week) will I really get another £225 p.a. For every years contribution after 2016 ? Or is it just really an extra £52 ?

Yes you really would. STP of £7,865 pa divided by 35 = £224.71 pa for each year's contributions and if your foundation amount is below the full STP then each year's contributions between April 2016 and your SPA are worth this amount.

enthusiasticsaver

xylophone wrote: »

As a female, your scheme pension age and GMP age are the same - presumably you do have a statement showing your GMP and excess at date of leaving the scheme?

I have a statement and various letters saying that I have a GMP and pension at day of leaving in December 1985 was £221 per annum which receives deferred increases of 8.5% per annum. Is that what you mean by excess? I know it pays out when I am 60 and I got a valuation in 2014.

kangoora

enthusiasticsaver wrote: »

I have a statement and various letters saying that I have a GMP and pension at day of leaving in December 1985 was £221 per annum which receives deferred increases of 8.5% per annum. Is that what you mean by excess? I know it pays out when I am 60 and I got a valuation in 2014.

That's quite a serious amount of pension. To give you an indication I had only £72 GMP revaluing at 7.5% p.a. with only 2 years service leaving my old firm in 1992. This calculated up to around £3.5k p.a. in my case including the non-GMP portion. I did calculate up to 65 however. Yours should be significantly more.

I put £221 at 8.5% compound interest for 30 years into a calculator and that came back with £2,554 p.a. - then you add the non GMP part of the pension.