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Should I take my pension

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Comments

  • Thanks for all the advice - My earnings including the Teachers pension will be over £11K but less than £43K. I don't intend splurging the lump sum, but will definitely get some professional advice.
  • Why is 5.11% per annum measly?

    That is way above what my currently active LGPS CARE pension has grown by this year as it has decreased by 0.1% as it is linked to CPI.
    As AlanP says, that doesn't quite make sense. Are you averaging over a long period or something? Unless you have special rights (e.g. some private sector DB schemes have - or had - underpins), I would expect revaluation in deferment to be linked to official inflation figures, possibly capped, in which case the increase just gone would likely have been nil.

    I think the issue here is the use of the word "deferment" - commonly used to mean "preservation". Increases in preservation are indeed usually in line with CPI, but I suspect lisa110rry is using the word "deferment" in its strict sense, i.e. deferral after normal retirement age, rather than preservation after leaving and before/up to normal retirement age.

    That said, while 5.1%pa (or 5.2%pa - not clear whether you've arrived at the daily rate using compound or simple interest calcs) for late retirement isn't as high as I've seen it in many schemes, it's not necessarily what I would call "measly" either - it's still a decent return, particularly in these times of low inflation. Some schemes don't offer actuarial increases for late retirement at all.
    I am a Technical Analyst at a third-party pension administration company. My job is to interpret rules and legislation and provide technical guidance, but I am not a lawyer or a qualified advisor of any kind and anything I say on these boards is my opinion only.
  • xylophone
    xylophone Posts: 45,744 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    You might find it useful for your overall retirement planning to obtain a new state pension statement in around October this year - this would give you your "starting amount" for new state pension - you can add to the starting amount by paying or being credited with NI contributions up to your state pension age.

    https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/210299/single-tier-valuation-contracting-out.pdf but the figure for new state pension should be £155.65.

    https://www.gov.uk/new-state-pension

    With regard to tax, you have stated that you are and will remain a basic rate tax payer so will pay 20% on your pension/earned income over the tax free allowance of £11,000.

    If you wish to claim your TPS pension, it is as well to begin the process well in advance.

    https://www.teacherspensions.co.uk/members/forms/applying-for-retirement.aspx

    It will also be as well to check your tax situation once your pension comes into payment so that you can be sure that you are paying the correct amount.
  • hyubh
    hyubh Posts: 3,744 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    edited 29 April 2016 at 8:25PM
    I think the issue here is the use of the word "deferment" - commonly used to mean "preservation". Increases in preservation are indeed usually in line with CPI, but I suspect lisa110rry is using the word "deferment" in its strict sense, i.e. deferral after normal retirement age, rather than preservation after leaving and before/up to normal retirement age.

    Ah! That makes sense.
  • atush
    atush Posts: 18,731 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    AJP16 wrote: »
    Thanks for all the advice - My earnings including the Teachers pension will be over £11K but less than £43K. I don't intend splurging the lump sum, but will definitely get some professional advice.

    Well if you take the pension, and open a DC pension to claw back tax paid on your TPS pension, then yu might be able to afford a little splurge with your automatic lump sum (dont take more).

    AS your new DC pension will build up a new pot, 25% will be tax free Which can come in later when you might need more of a lump sum into your savings.

    So, save tax and build up a second lump sum by opening a DC pension.
  • bestaroi
    bestaroi Posts: 29 Forumite
    Ninth Anniversary 10 Posts Name Dropper
    Hi I am looking for some advice. My husband has an NHS pension although he now works in the private sector. We wish to fund an extension on the house and wondered whether to take the pension as i believe 25% is tax free. I dont know whether you could just take a percentage out or you have to withdraw all and if so what advice could anyway give re investing the remainder to avoid hefty tax. Any advice would be appreciated as I know very little about the matter.Thanks
  • atush
    atush Posts: 18,731 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    You would have to commence the whole pension.

    Plus it is reduced if you take it early. How old is he? If he is say, 55 he could lose more than half of it. Which would be unwise in the extreme. Can you not fund the extension from equity in the house?

    and you really should start your own thread for the most/best replies?
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