Brexit - do I retire now?

Misterhelpless

Like Vonnie earlier, I am concerned about the current dreadful Brexit turmoil both in the UK and abroad. I have already decided to retire early at Christmas this year (turning 58). I have a good NHS/Teachers Pension all ready for me and have done all my homework. Everything is good to go.

Until Brexit....

I don't see how my pension could be changed or damaged in such a short period, but the turmoil worries me. What do folks with experience in the field think: should I start my pension process now to get out into retirement ASAP, or not worry and stick with my original plan? I have to give three months notice anyway. I am inclined to stick to my plan but....:undecided

Thank you for any guidance!

lovinituk

Seriously, nobody has a functioning crystal ball so can't predict what will happen. All you will get are some opposing opinions but who knows which ones will turn out to be correct.

AnotherJoe

Misterhelpless wrote: »

Like Vonnie earlier, I am concerned about the current dreadful Brexit turmoil both in the UK and abroad. I have already decided to retire early at Christmas this year (turning 58). I have a good NHS/Teachers Pension all ready for me and have done all my homework. Everything is good to go.

Until Brexit....

I don't see how my pension could be changed or damaged in such a short period, but the turmoil worries me. !

Well it shouldn't worry you, (or not on account of your pension anyway), because your pension is entirely disconnected from the stock market, amd surely you are aware of that, so why even pose such a question?

Your reaction reminds me of this recent tweet.



Stick with Plan A.

TrustyOven

AnotherJoe wrote: »

Well it shouldn't worry you, (or not on account of your pension anyway), because your pension is entirely disconnected from the stock market, amd surely you are aware of that, so why even pose such a question?

Why would someone's pension not be connected to the stock market?

Are you suggesting someone should be 100% in cash just before they retire?

What about the concept of staying (partially) invested in a mix of bond funds and stock funds to provide growth during retirement?

molerat

TrustyOven wrote: »

Why would someone's pension not be connected to the stock market?

Are you suggesting someone should be 100% in cash just before they retire?

What about the concept of staying (partially) invested in a mix of bond funds and stock funds to provide growth during retirement?

Both the NHS and teachers pensions are defined benefit and are not governed by or invested in the markets. OP will get x/x ths of their salary whatever condition the markets are in.

jamesd

Given your type of pension, brexit has no impact on your decision for the defined benefit part.

Of more concern would be if you're taking the pension sooner than the normal retirement age for the scheme and getting a poor actuarial reduction for taking it early. In such cases doing things like living on 0% for purchase credit cards for a year or three can improve the long term financial situation.

The TPS does have an AVC option and at any time from age 55 to 75 that can be taken regardless of the decision for the main defined benefit pension. 25% of this AVC can be taken as a tax free lump sum with the rest moved into income drawdown and taken as desired, with that income being added to normal taxable income in the tax year it is taken for income tax purposes. This means that the tax free lump sum and drawing on the taxable part can be an excellent tool to allow delaying taking of the main DB pension, avoiding the actuarial reduction.

It is also worth considering that you can pay up to your whole earned income into a pension and get tax relief on it, then take it out again at any time from age 55 to 75. This makes it an excellent thing to do in the year or two before retiring. Particularly good is if you have low income from other sources so even more than the tax free lump sum ends up not being taxed, due to having more of your income tax personal allowance unused. This lower tax benefit can also help with the decision to delay the DB part until normal retirement age. This does not need to be in the TPS AVCs, it can be any pension. Beyond the income limit, there is also a limit of £40,000 a year into pensions in your name, including DB and by an employer. Unused parts of this can be carried forward from the past three years to allow more pension contributions if needed.

The AVC part is invested in stock or bond markets so some consideration does need to be given to how to invest it. For short to medium time frames of a year or three it is worth considering use of money market or deposit investment choices unless you plan to remain invested in drawdown after retiring. The deposit fund is available to all teachers, the cash fund only in Scotland and Northern Ireland. Lifestyle options are not suitable for this time scale.

Given the tax and other benefits I suggest that you strongly consider additional pension contributions then using them and/or other assets to delay taking the DB part until NRA.

You might also find it useful to edit your post then click on the advanced option and change the title to include TPS or teachers' to help to attract the attention of participants here who are more familiar with this scheme, there are some who are very familiar with it.

TrustyOven

molerat wrote: »

Both the NHS and teachers pensions are defined benefit...

Ahh ok! That makes sense. I didn't realise that every single NHS / Teachers pension scheme is DB.

bigadaj

Misterhelpless wrote: »

Like Vonnie earlier, I am concerned about the current dreadful Brexit turmoil both in the UK and abroad. I have already decided to retire early at Christmas this year (turning 58). I have a good NHS/Teachers Pension all ready for me and have done all my homework. Everything is good to go.

Until Brexit....

I don't see how my pension could be changed or damaged in such a short period, but the turmoil worries me. What do folks with experience in the field think: should I start my pension process now to get out into retirement ASAP, or not worry and stick with my original plan? I have to give three months notice anyway. I am inclined to stick to my plan but....:undecided

Thank you for any guidance!

Just to confirm is your pension plan solely the defined benefit one, or are you looking to draw on a defined contribution plan to fill the gap to taking the db pension.

MoneySavingUser

TrustyOven wrote: »

Ahh ok! That makes sense. I didn't realise that every single NHS / Teachers pension scheme is DB.

Any AVCs would be DC though I think.

Misterhelpless

Many thanks for your responses, the main advice appears to be 'don't worry.'

And thank you JamesD for the extended advice. The AAB calculations on the TPS are fixed in stone and are actually recently improved over the earlier deal. There is little or nothing I can do to alter that. I've already stored up AVCs so they are OK (well - as best they can be). The difference between AAB and full pension is now reaching the point where I choose to go early and not worry about having a slightly reduced deal. Yes I could get more for waiting 2 more years but given health problems, life outlook and assets saved, it is of little worth to me spending 2 more years at work. To quote: "my work here is done". I've looked into additional contributions and the advantages would have been best if applied a few years ago. I could do it but to be frank I'd rather stick the cash into our home and make it more comfy for us.

I am good to go, have received relevant financial advice etc. The current mess just unsettled me, that's all!

I will stick with my original plan and go end December. And boy am I looking forward to it!
Many thanks and good luck all! :beer:

kidmugsy

Misterhelpless wrote: »

Thank you for any guidance!

Return to whoever has been winding you up, and deliver a swift uppercut to the jaw.