Coming out of final salary early

kidmugsy

Flu_strength_Darren wrote: »

Sorry Kidmugsy im getting lost here, whats the questiin?

In your opening post you said "My pension ... [is] worth £10000 a year at my last statement."

I want to know what that means. Your best answer is just to quote what the statement said. I could guess that it means something like 'if you continue to work (at your present salary) and contribute to the pension until the scheme's Normal Retirement Age then your pension will be the index-linked equivalent of £10000 a year at present day values'.


But why leave us to guess? Why not simply quote what the statement said?

Marcon

Flu_strength_Darren wrote: »

My pension as a result is not increasing by much at all, about £400 ( costing me !!!8364; about 3500 a year in contributions) a year. Its worth £10000 a year at my last statement.i plan on stopping work at about 57 so have 7 years left. So i reckon will be worth approx £13000 by 57.

Would be transfering at 57 anyway and if values reduced???

Looking at other posts in this thread, it is a bit hard to work out exactly what is going on. Are you sure this is a final salary scheme and not, say, a CARE scheme?

Are you saying that your pension would be worth £13,000 by age 57, and payable from age 57 - or £13,000 and payable from your scheme's Normal Retirement Date (in which case there is likely to be a reduction in the starting level of your pension of about 4% or more for each year it is paid before NRD).

Nobody can guess where transfer values will be in 7 years time, so impossible to guess the best way forward for you if transferring out is what you are determined to do - but why would you want to?

Flu_strength_Darren

Kidmugsy.

The £10000 is"pension you have built up so far with membership of the scheme".
I am assuming, possinly incorrectly that this means if i left the scheme this £10000 is an amount thats guaranteed at retirement (60) or if i transfered would be worth around 35x 10000, which is the going rate at work lately.
Hence the dilema of a £400 ish per year increase or a transfer of 350k ish and investment for at least 7 years.

Marcon

What fraction (e.g. 1/60th, 1/80th) do you build up for each year of pensionable service? Looking at the numbers, I'm beginning to wonder if you build up 1/80th of pensionable pay + 3/80ths of pay as an 'automatic' cash lump sum when you start to draw your benefits from this scheme?

I'm guessing, obviously. There's very little information about your salary/the structure of the scheme, so any info you can supply (including the % of your pay you contribute) would mean people could give you more informed answers.

Audaxer

Flu_strength_Darren wrote: »

Kidmugsy.

The £10000 is"pension you have built up so far with membership of the scheme".
I am assuming, possinly incorrectly that this means if i left the scheme this £10000 is an amount thats guaranteed at retirement (60) or if i transfered would be worth around 35x 10000, which is the going rate at work lately.
Hence the dilema of a £400 ish per year increase or a transfer of 350k ish and investment for at least 7 years.

So where did the £13,000 per year at 57 come from?

The £400 increase per year is confusing. If it is a final salary pension and it is projected to be £10k per year at 60, then that will be dependant on you keeping up contributions to that scheme until you are 60. If you took the pension at 55 or 57, it would be actuarially reduced so you would get a lot less than £10k per year, so your contributions are buying you more than the £400 extra pension a year.

Oasis1

I thought with DBs, you 'bank' your fraction of salary each year and then that's yours from the set retirement date - regardless of if you continue to pay in/work for the employer?

Brynsam

Oasis1 wrote: »

I thought with DBs, you 'bank' your fraction of salary each year and then that's yours from the set retirement date - regardless of if you continue to pay in/work for the employer?

Correct. I think there's huge confusion here about which figures relate to what!

OP, might be an idea to give TPAS a call https://www.pensionsadvisoryservice.org.uk or fix an appointment with PensionWise https://www.pensionwise.gov.uk to try and clarify.

Brynsam

Audaxer wrote: »

So where did the £13,000 per year at 57 come from?

The £400 increase per year is confusing. If it is a final salary pension and it is projected to be £10k per year at 60, then that will be dependant on you keeping up contributions to that scheme until you are 60. If you took the pension at 55 or 57, it would be actuarially reduced so you would get a lot less than £10k per year, so your contributions are buying you more than the £400 extra pension a year.

£10,000 is the pension built up to date - see post 34.

OP is currently 50, so I think is working on the basis of no salary increase, so an extra £400 a year (or thereabouts) added to the pension built up each year for the next 7 years = £2,800, rounded to £3,000, to give £13,000 built up by the age of 57 if still a contributing member for the next 7 years.

Middlestitch

Marcon wrote: »

What fraction (e.g. 1/60th, 1/80th) do you build up for each year of pensionable service? Looking at the numbers, I'm beginning to wonder if you build up 1/80th of pensionable pay + 3/80ths of pay as an 'automatic' cash lump sum when you start to draw your benefits from this scheme?

I'm guessing, obviously. There's very little information about your salary/the structure of the scheme, so any info you can supply (including the % of your pay you contribute) would mean people could give you more informed answers.

OP seems to have posted a rather vague question and then responded somewhat selectively when those trying to help have asked for more information. Rather difficult to help in those circumstances and rather puzzling that more info isn't forthcoming.

Brynsam

Middlestitch wrote: »

OP seems to have posted a rather vague question and then responded somewhat selectively when those trying to help have asked for more information. Rather difficult to help in those circumstances and rather puzzling that more info isn't forthcoming.

Quite - although sometimes what appears to be a simple request for more information is completely baffling for the person to whom it is directed.