Planning my parent's retirement

ent_moot

Yes you're right.

But when you're desperate, you can't help trying for the maximum.

xylophone

Your father is aged 63.

When exactly does he become eligible for state pension?

What exactly does his state pension forecast say?

Your mother is aged 63 - when exactly does she become eligible for state pension?

What exactly does her state pension forecast say?


When was your mother a member of TPS?

Is she or is she not currently in receipt of the pension?

You do realise that the TP had benefits in addition to the pension?


For example, there were death in service benefits, dependants' pensions (where appropriate), and there is a widow/widower pension benefit?

You also realise that PC is calculated on household income?

You realise that there is an assumed (notional) income from capital?

ent_moot

When exactly does he become eligible for state pension?

I would prefer not to give away their exact dates of birth for privacy reasons. However, as I said, the state pension calculator (which takes only DoB as input) says 2 years from now for both of them. Do you mean something else when you talk about their "state pension forecast"?

When was your mother a member of TPS?

The past 14.5 years. She stopped working a few months ago. Neither of my parents have ever received any pension.

You also realise that PC is calculated on household income

Yes. I'm aware that the TP is useful because it can be "stacked" with other income whilst PC cannot. This will be useful for a few years, but won't amount to much - certainly a lot less than if the pension could be taken as a lump sum in their case.

You realise that there is an assumed (notional) income from capital?

What capital? As far as I understand, your house doesn't count.

But yes, I get that a TP is great in ordinary circumstances.

xylophone

What capital? As far as I understand, your house doesn't count.

No, but savings could. You need to read through the whole of the Age UK Fact Sheet.

Do you mean something else when you talk about their "state pension forecast"?

Have your parents obtained a forecast of new state pension from here.

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

Use this service to find out:

how much State Pension you could get (this amount is also known as your State Pension forecast)
when you can get it
how to increase it, if you can

Re TPS

https://www.teacherspensions.co.uk/members/planning-retirement/calculating-benefits.aspx

LHW99

I think if your mother was teaching before 2007, that part of her pension may have an NPA of 60. Not sure if that can actually be taken then though, if you also have service after 2007.
see: https://app.croneri.co.uk/feature-articles/teachers-pension-scheme-april-2015-changes?product=3
May be worth clarifying whether she should have had payment of part of the pension already wqith the TPS.

ent_moot

Wow, I'm getting seriously confused. That article you just quoted suggests that she may be entitled to the larger 37k lump sum!

Members who joined before 2007 receive a pension of 1/80th of final pensionable salary per year of pensionable service along with a guaranteed lump sum based on three times the pension payable at retirement, which can be topped up by commuting pension into an additional lump sum.

Members who immediately before 1 April 2012 were within 10 years of their normal pension age will continue to accrue final salary benefits in accordance with the TPS rules applicable to them up to retirement.

My mum fits both of these dates! This is also consistent with the site calculator, which is extremely encouraging.

Gosh, this is a roller-coaster.

xylophone

And have they both now used the state pension forecast service link in post 25?

jamesd

ent_moot wrote: »

I've used the calculator on https://www.teacherspensions.co.uk. It says there are two options:

a) 6900 annual + 21k lump sum
b) 5600 annual + 37k lump sum

I think that b) is a much better option, because they're not going to get above the pension credit cap long-term, so the extra annual is pointless after full retirement.

I'm not sure that you're right about not getting above the pension credit cap long term. It depends to a significant extent on the downsizing/relocating option.

Say they are fairly close to the cap, deferring claiming the state pension causes it to increase by 5.8% a year when it's claimed. That tends to be a very good move for people with normal life expectancy and it could, if they are close enough, be a good use of capital.

As well as that possibility, investment income can be used. Most people would just think of savings accounts but normal investments like bonds and shares can pay around 4-5% and interest paying investments like peer to peer can pay 10% or sometimes more.

Take care about any plans to use capital to repay a mortgage. Usually the expected income available from investments is higher than the mortgage interest costs so using investment income to cover the interest and keeping some would turn out to be the most efficient method. But benefits means tests can change that.

It's a bit too soon to try to see whether it is possible to get above the means tested benefit level, though. Best to wait a bit and do that once more of the state pension aspects is certain. It does look to be quite challenging to get above the means tested benefit level, though, so there's a high chance that you're right, just needs to be considered to be sure.

Robin9

A couple of questions

1) Have your parents any savings, life assurance that will add to the money pot post retirement?

2) Is the mortgage repayment capital and interest so that in 8.5 years the slate is clean or interest only relying on an endowment or other savings to pay it off

sammyjammy

If your mother has a pension lump sum and uses this to repay debts that are not "due" she may be considered to still have this money for pension credit purposes which may mean they are not entitled.


I really would be very careful using current benefit regulation to calculate their income, benefit entitlement and rules can and do change.