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Retiring at 55 & Occupation Pensions
Comments
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Yes this another way some schemes rip you off if you retire early. There's no excuse for a reduction in the spouses pension if you retire early, because it's a benefit paid from your death whenever that is, your retirement date is irrelavent, so shouldn't affect it.I note that with some, the spouses pension (paid after my death) is also reduced. With others, the spouses pension is paid at the unreduced amount.0 -
We also retired at 56 with similar figures, hubbys pension increases at a guaranteed minimum of 3% until NRA which is greater than the increase if he had deferred it
His normal retirement age was 62 and the pension was reduced by approx £2,000 a year, after two years we have just about made up half already.0 -
Yes this another way some schemes rip you off if you retire early. There's no excuse for a reduction in the spouses pension if you retire early, because it's a benefit paid from your death whenever that is, your retirement date is irrelavent, so shouldn't affect it.
It's not a rip off. Where the pension is in payment, most survivors' pensions are based on a proportion of the actual pension. Those are the rules of the scheme; end of story.
Commutation (where a member gives up part of their own pension for a tax free lump sum when retiring from a DB scheme) is a different story. Any spouse's or child's pension will be calculated as if the member had not taken any tax free cash. I wonder if some of those posting/reading this thread might be confusing the two - easy to do.0 -
The spouse pension is paid from the date of the member's death to the date of the spouse's death. This usually applies whether the member's death occurs while working, in deferment, or while a pensioner.It's not a rip off. Where the pension is in payment, most survivors' pensions are based on a proportion of the actual pension. Those are the rules of the scheme; end of story.
Commutation (where a member gives up part of their own pension for a tax free lump sum when retiring from a DB scheme) is a different story. Any spouse's or child's pension will be calculated as if the member had not taken any tax free cash. I wonder if some of those posting/reading this thread might be confusing the two - easy to do.
So the retirement date of the member has no effect whatsoever on the period for which the spouse's pension will be paid, it's paid from the member's death till spouse's death. So there is no logical reason for early retirement reductions applied to a member's pension to affect the value of the spouse's pension.
Where it does, like high ERFs, like (usually) bad PIE's (exchanging increases on pre-1997 service for a larger initial pension), like bad commutation rates, it's a way for schemes to save money at the expense of members.
I don't know about most, but many schemes do base spouse's pension purely on member's service, salary etc and take no account of early retirement, LGPS do, and my scheme does mostly (a few exclusions). I got a quote for retirement at 50 where the spouse pension was almost 90% of mine!0 -
Where it does, like high ERFs, like (usually) bad PIE's (exchanging increases on pre-1997 service for a larger initial pension), like bad commutation rates, it's a way for schemes to save money at the expense of members.
The schemes are simply following what is set down in their Trust Deed & Rules. I'm sure you would be the first to bleat if they didn't.0 -
Yes this another way some schemes rip you off if you retire early. There's no excuse for a reduction in the spouses pension if you retire early
It's not a rip-off if it's part of the T&Cs you signed up to. I get weary of the endless juvenile screeching about "rip-offs".Free the dunston one next time too.0 -
If you're planning to take all of those early you're probably making a bad mistake, The better way to do it would normally be to transfer one to a personal pension, draw on that pot then take the others closer to their normal pension age.I shall be retiring at 55. I have four DB schemes, with a range of reductions from 32% to 45%.
Similar if you're planning to take lump sums. The commutation rate for a lump sum may be around 16:1 while the CETV is likely to be twice that.0 -
With these amounts surely it would have taken much longer than 8 years to earn back the extra money if you had waited until 60. Just looking at your gross sums not including increases, if you took the pension at age 60, by 68 you would have earned 8*£20.5k = £164k. By taking it at 56, by age 68 you will have earned 12*£17.5k = £210k. In my view you have benefited more than you thought, as taking your pension 4 years early has not reduced it much.jerrysimon wrote: »I retired last year at 56 with a DB pension payable at 60. It was reduced from about 20.5K - 17.5K. I worked out it would take me eight years to earn back the extra money drawn in 4 years had I left it to aged 60.0
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