Take a final salary pension early or wait

mollycat

happyhero wrote: »

Hello Bravepants, see my reply to Linton and let me know what you think please.

You you need to find the % figure for acturial reduction, (by contacting BT pensions dept if google can't help you).

This is the crucial missing figure in the "take it now, take it later?" debate.

System

happyhero wrote: »

Hello Economic, see my answer to Linton and let me know what you think please.

Those figures are the value of your (deferred?) pension increasing due to indexation (CPI or RPI) and tell you nothing about the actuarial reduction for taking your pension early. For the actuarial reduction you would have to check the pension scheme rules or website (with my pension there is a modeller that let's me check the pension if I retire early).

GSP

Hi Happyhero,
I would say very ballpark and depends on schemes but based on your numbers available you could be looking at £750,000. Play around with a calculator on the the tidewaywealth website to see the various scenarios with or without lump sums and the "growth" rates.
Personally, I did not take a lump sum and keep it all invested in the pension.

In your case you have other investment options as well so are better equipped than me at getting through retirement.

The message mostly seems to be is enjoy, as well as of course being careful.

kidmugsy

happyhero wrote: »

"The value of your benefits as at the date of this letter, are as follows:" so I think that means that is what I would get at the date of the letter, how do you read that, it seems obvious but then I start doubting myself?

It's probably just a lousy piece of writing. I suspect the author should have said something like "the value of your benefits at age 60, as estimated at the date of this letter". Somewhere else the estimation method should be explained including, for instance, the assumed inflation rate.

There are two outstanding problems with pensions. (i) Complexity. (ii) Pathetically bad writing. Awful writing. Utterly stinky-poo writing. Writing such as a teenager should be ashamed by. Witless, drivelling writing. Do I make myself clear?

Even when the writing isn't vile it tends to be slack. Thus:
"total pension £15,460.99 lump sum £46,382.96" would be better as
'... annual pension £15,460.99; lump sum £46,382.96'.

An old-fashioned schoolmaster, equipped with a red pen, should be hired to edit such letters, waging war on slackness, ambiguity, error, and wordiness.

happyhero

Hmm, I think when I ask for figures this year I am going to be a lot more specific about what figures I want.

As for this thread I feel more inclined to wait until 60 as it seems there is a very strong chance that the real figures for drawing early could be a fair bit lower.

Taking it one step further, anybody any idea on why it would not pay to leave the money not taken past 60 with this particular BT DB pension, surely it would increase its annual potential normally the longer I left it.

Also what effect would not taking the £50,000 lump sum have on the yearly income figure for me?

Linton

happyhero wrote: »

Hmm, I think when I ask for figures this year I am going to be a lot more specific about what figures I want.
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Yes - very specific!

As for this thread I feel more inclined to wait until 60 as it seems there is a very strong chance that the real figures for drawing early could be a fair bit lower.

Taking it one step further, anybody any idea on why it would not pay to leave the money not taken past 60 with this particular BT DB pension, surely it would increase its annual potential normally the longer I left it.

Also what effect would not taking the £50,000 lump sum have on the yearly income figure for me?

Some schemes have a fixed retirement date and wont pay more if you defer.

Someone here may know something about your particular BT scheme but you will only get definitive answers to your questions by asking the scheme administrators.

TARDIS

A quick Google reveals you can take a larger pension if you forgo the tax free lump sum. Think you have to apply to find out the figures of that and the actuarial reduction from taking it before NPA. Didn't see anything about increase pension for taking later that 60 though, although was just a quick skim read as I'm nosy (and obviously have too much time on my hands :-)

Suggest reading the info on their website then contacting them to confirm the specifics:
https://www.btpensions.net/information/useful-documents

robin61

BT have announced that the actuarial reduction terms will be more attractive for those still working for the company on 31May 2018. I've not seen the new figures as yet but I am awaiting with interest.

I think I read that the trustees will be looking at the actuarial reduction terms later in 2018. So although as a deferred member the 31 May announcement won't benefit you there might be an improvement later on this year.

Tom99

[FONT=Verdana, sans-serif]As said above you will probably find you will get about 5% less pension for each year you take it early. So 3 years extra pension is less roughly 15%.

[/FONT] [FONT=Verdana, sans-serif]At that rate the break even age is about age 76 so if you plan to live beyond 76 you would be better off taking the pension at age 60.

[/FONT] [FONT=Verdana, sans-serif]If you take inflation into account then in cash terms the break-even age is slightly lower so with say 2.5% pa inflation the break-even age would be about 73.[/FONT]

robin61

GSP wrote: »

Just to throw something else into the mix, have you been able to obtain a transfer out CETV figure. May potentially leave you with more money p.a. and money to pass onto to kids. Will also leave you with a drawdown pot to manage and all that entails!
Maybe a lot to weigh up depending on circumstances.

Edit: Also no penalty applies if you transfer out now and drawdown.

BT employees can get an indicative transfer out value from the new pension portal. I got one out of interest this week. It wasn't anything like as attractive as some of the transfer values I've seen mentioned on here for other schemes. Still no harm in the OP asking.