Retirment in 2016 advice please

doloresdavies

I can't be housed by the HA I work for. I can apply to the Council when I get the date of my Redundancy but I would only get a 1 bedroom Sheltered flat with themselves or another HA. I often have family to stay so this would not work for me. I need a two bedroom property at the very least. I haven't been able to claim any Housing Benefit for ages, my husband's Income tipped us over the threshold. Thanks to all of you but I think I need to sit down with the CAB and go through the issue. Some of your replies are too complicated!!! But thanks all the same.

xylophone

http://www.tpt.org.uk/docs/default-source/schemes/shps/documents/scheme-guides/shps-db-guide-for-members-employee-document.pdf?sfvrsn=4

Is the above the booklet for your scheme - if so, a read through might clarify your options.

doloresdavies

Good Morning, Yes - that is the Pension provider I am with, but with my firm's own Final Salary Pension scheme. The Options I have been given are: Full pension of £8087.17 and no Lump Sum. Or: Pension Commencement Lump Sum £35153.48 and Reduced Pension of £5273.10 As I said previously, I have never been a high-earner. Ignoring my husband's pensions, I need about £2000 per month to come in to cover my housing bills. And deducting my SP of approx. £500 - that leaves a balance of £1500 per month needed. What I really need to find out is how much of a Lump Sum to take, to leave me with £1500 per month???

bigadaj

That's a huge housing cost, isn't that above your current earnings?

So the difference between your pension without a lump sum and with lump sum is divided by the lump sum to give your commutation factor, or the other sat around as reverse commutation. This sounds complicated but all you need to do is work this out and determine whether this can be returned by other investments or savings, your commutation factor is 12.5, meaning that you'd need to earn 8% interest which obviously isn't possible currently with any low or medium investment or savings product.

It would be more sensible to not take any lump sum as this would give you the east return, the problem is this doesn't appear to give you enough for what you want.

You could take a lump sum but this would run out in a couple of years and leave you with a low annual income after this.

The options appear to be to see what benefits you might claim, though these are being cut back and your outgoings appear high, get some more work after retirement or move to a cheaper area.

maximumgardener

doloresdavies wrote: »

Good Morning, Yes - that is the Pension provider I am with, but with my firm's own Final Salary Pension scheme. The Options I have been given are: Full pension of £8087.17 and no Lump Sum. Or: Pension Commencement Lump Sum £35153.48 and Reduced Pension of £5273.10 As I said previously, I have never been a high-earner. Ignoring my husband's pensions, I need about £2000 per month to come in to cover my housing bills. And deducting my SP of approx. £500 - that leaves a balance of £1500 per month needed. What I really need to find out is how much of a Lump Sum to take, to leave me with £1500 per month???

so.......your numbers show £8087 + £6500 = £14587 pa
next tax year assuming you have full tax allowance of £11000 , you should pay tax of £717
so nett pensions should = £14587 - 717 = £ 13870 pa , which equates £1155 per month.

This is way short of your required £2000 per month....so will need addressed.
work part time??

hyubh

saver861 wrote: »

You are working on a 20:1 ratio. Not sure you would get that ratio anywhere. Its usually about 12:1 max

Other way round. 12:1 is the public sector 'standard' rate particularly associated with the 2008 versions of the LGPS and TPS (and the CARE schemes introduced since then). Historically the public sector norm was actuarially neutral commutation rates, which matched practices in private sector DB-land. In the main the latter hasn't changed since however, most notably the USS which is (currently) a Club scheme (i.e., member of the Public Sector Transfer Club) yet still without a deliberately punitive commutation rate.

(The typical private sector way to put a lid on deficits wasn't to fiddle with the commutation rate, but close a DB scheme completely.)

maximumgardener

you could also use the lump sum amount of £35K to ease you into a lower cost housing situation???
needs discipline .

that way your pension income would be £5200 +6500 = £11700 pa approx
giving you just under £1000 per month nett

add £1000 per month from your £35k and you run out of that money in approx 3 years

GunJack

why are you ignoring your hubby's income? You seem to be wanting to do retirement on your own pension only?

Also, I'd reconsider the council house, family can sleep on the sofa if pushed for space and lack of a second bedroom, surely? Especially as it probably would drastically reduce rent costs....

RickyB2000

Another thing to look at is whether you can defer retirment? State pension goes up by ~10% a year and your occupational pension may do as well.

If not, you could look at taking the occupational pension and getting a part time job to top you up and defer the state pension as long as you need to. By my calculations, if you took the lump sum you would need to defer the state pension for around 3 years to get your total income back to where it would be if you didn't. In this case, you would actually work out better off taking the lump sum, but would need another job or be able to live on less than you are asking for. Defer for 7 years and taking the £8k occupational pension (lump sum will probably run out long before then) you should have the £1500 a month. Not sure how inflation affects this.

Anyone care to confirm my calculations?