Taking BT Pension Early

kidmugsy

Spenditnot wrote: »

My greater concern is the impact on the total income she will have if I'm first to pop-my-clogs.

(i) You should be tucking £3,600 gross p.a. into a personal pension of some sort. Then if you clogspop before 75 she can have the lot tax-free as a pension boost. You could do the same for her.

(ii) She could defer her state pension for a couple of years and harvest the 5.8% boost for each year.

tigerspill

I dont think you mention if you are section B or C.

I am section C and for me I will be taking this at 55 (assuming the actuarial reductions aren't changed in the next 3 years).
For me it is a no brainer to do this.
Also Section C currently uses RPI for increases. And CPI in deferment. So that is an extra % per year increase. This is obviously subject to BT losing its appeal to make this CPI.

robin61

tigerspill wrote: »

Also Section C currently uses RPI for increases. And CPI in deferment. So that is an extra % per year increase. This is obviously subject to BT losing its appeal to make this CPI.

Are you sure about that ? I'm in B but I'd always been under the impression that C used RPI in deferment. I haven't heard anything further about the possible appeal. Let's hope they don't do that.
I think the OP is in B anyway as the lump sum quoted is the standard Scheme B lump sum.

And yes, these new terms have been very handy. For me also it didn't take me long to adjust my strategy.

Spenditnot

tigerspill wrote: »

I dont think you mention if you are section B or C.

It's the section B scheme with CPI both while deferred and in payment. But these 'new' early retirement factors coupled with the pension taken now being almost completely within the (current) personal allowance is still highly persuasive.

robin61

Spenditnot wrote: »

It's the section B scheme with CPI both while deferred and in payment. But these 'new' early retirement factors coupled with the pension taken now being almost completely within the (current) personal allowance is still highly persuasive.

The other decision you will have to take is whether to take the standard option which is fully index linked or a higher starting pension which is partially index linked. How long the standard pension takes to catch up to the higher starting option will depend on the rate of future inflation. For me based on a CPI of 3% it was 11 years for the standard option to catch up and 20 years to make an overall profit. Clearly there is a risk here. But remember that at 67 there will be a State pension. So this might be a good way of having more money early in retirement. I have a spread sheet where you can put in the figures and model different CPI assumptions. If you want it just PM me and I will email it to you.

Spenditnot

robin61 wrote: »

The other decision you will have to take is whether to take the standard option which is fully index linked or a higher starting pension which is partially index linked. How long the standard pension takes to catch up to the higher starting option will depend on the rate of future inflation. For me based on a CPI of 3% it was 11 years for the standard option to catch up and 20 years to make an overall profit. Clearly there is a risk here. But remember that at 67 there will be a State pension. So this might be a good way of having more money early in retirement. I have a spread sheet where you can put in the figures and model different CPI assumptions. If you want it just PM me and I will email it to you.

Thanks, but that's one part of the decision I don't think we have a problem with. We've lived through too many periods where inflation has been very significantly above recent levels and one particular feature of the BT scheme I like is that there is no cap on the inflation protection (albeit at the lower CPI level). We're fairly risk averse (hence all the soul-searching about taking this pension early) so would be prepared to forego a higher initial pension for the longer term inflation protection.

Thrugelmir

Spenditnot wrote: »

I'm naturally suspicious of my ability to have not smelt the rat.

With CPI running at over 2% and investment returns (i.e. gilts lower). Then offloading the risk for the pension scheme makes sense.

Compound the increase in CPI on £1,500 over say a 30 year period and the figures speak for themselves.

tigerspill

robin61 wrote: »

Are you sure about that ? I'm in B but I'd always been under the impression that C used RPI in deferment. I haven't heard anything further about the possible appeal. Let's hope they don't do that.
I think the OP is in B anyway as the lump sum quoted is the standard Scheme B lump sum.

And yes, these new terms have been very handy. For me also it didn't take me long to adjust my strategy.

I believe you got out? Unfortunately my application to leave was rejected. Not happy.
I am almost certain that C is CPI in deferment. But not you have raised a wee doubt so will check.

robin61

tigerspill wrote: »

I believe you got out? Unfortunately my application to leave was rejected. Not happy.
I am almost certain that C is CPI in deferment. But not you have raised a wee doubt so will check.

Yeah I left on 1st August. It all fell into place nicely and I feel very fortunate. I'm sorry it didn't work out for you but maybe you will get another chance ? I know some of my colleagues were not accepted and I do feel for them. Hard not to when you have worked with people for a long time.

What's your plan now ? If I had been rejected it would have been hard to get motivated but providing I could I would have made sure I put a couple of more grand into the special additional contribution to make sure my AVC was maxed out and then stuff as much as I could into the BTRSS. That way there are still some early retirement options down the line even if they keep turning you down.

tigerspill

robin61 wrote: »

Yeah I left on 1st August. It all fell into place nicely and I feel very fortunate. I'm sorry it didn't work out for you but maybe you will get another chance ? I know some of my colleagues were not accepted and I do feel for them. Hard not to when you have worked with people for a long time.

What's your plan now ? If I had been rejected it would have been hard to get motivated but providing I could I would have made sure I put a couple of more grand into the special additional contribution to make sure my AVC was maxed out and then stuff as much as I could into the BTRSS. That way there are still some early retirement options down the line even if they keep turning you down.

In my head I have left. I have spoken to my boss and made sure he understand my position and my desire to leave. I am maxing out SACs.
I am hoping I get another opportunity with the ongoing reorganisations.