Take pension and carry on working - income tax query

Silvertabby

“ Different schemes may have different rules - but if she is currently working in the public sector then she won't be able to draw her benefits and just carry on working in her current post.
Originally posted by Silvertabby

techwatcher wrote: »

Thanks - my wife works in the private sector so this aspect shouldn't be a problem.

Some private sector pensions, especially the older DB ones, do have similar rules to public sector schemes. Have you checked the scheme booklet?

techwatcher

Silvertabby wrote: »

Some private sector pensions, especially the older DB ones, do have similar rules to public sector schemes. Have you checked the scheme booklet?

Thanks - we will check the scheme booklet.

zagubov

Can your wife get onto her union rep (assuming she has one) as soon as possible?

This needs very careful thought. Taking the pension before redundancy offers get made might turn into something she regrets.

In fact taking it this early would be costly for her anyway, as others have already said.

techwatcher

zagubov wrote: »

This needs very careful thought. Taking the pension before redundancy offers get made might turn into something she regrets.

Thanks. Could I ask what you are thinking may happen is she takes the pension before a redundancy offer?

Silvertabby

“ This needs very careful thought. Taking the pension before redundancy offers get made might turn into something she regrets.
Originally posted by zagubov

techwatcher wrote: »

Thanks. Could I ask what you are thinking may happen is she takes the pension before a redundancy offer?

Does your wife's employer offer a pension enhancement if made redundant after the scheme's minimum retirement age? If it does, then taking the pension (voluntarily) before redundancy could be a very expensive mistake.

zagubov

techwatcher wrote: »

Thanks. Could I ask what you are thinking may happen is she takes the pension before a redundancy offer?

I'm not sure your wife should even mention to her employer about being interested in collecting her pension until redundancies are being offered. It might undermine her negotiating position. They might not make her a good offer as they think she's quitting anyway, whereas if she gets a redundancy offer she can mention she's close enough to retirement that she might be tempted to have enhancements paid into the pension.

I'm speculating, obviously, but i know people who have been offered redundancy and given good pension deals as part of the package.

Early retirement at her age would involve actuarially reduced benefits which would be quite savagely cut. Her life expectancy at 55 is likely to be several decades.

Also, as pointed out before, once she starts her pension she may well not be allowed to continue working (at least working full-time). Some jobs require you to cut your hours until you earn no more than a full-time worker (e.g pension + salary is capped at previous full-time salary).

There may be loopholes (such as taking a break in employment before restarting work) but these need insider knowledge that posters here may not have.

Good luck!

Alice_Holt

Silvertabby wrote: »

Does your wife's employer offer a pension enhancement if made redundant after the scheme's minimum retirement age? If it does, then taking the pension (voluntarily) before redundancy could be a very expensive mistake.

And "but i know people who have been offered redundancy and given good pension deals as part of the package."
wrote Zagubov

Quite.

The terms of my redundancy included the employer making a £50k payment into my pension scheme, together with enhanced pension benefits.

techwatcher

An update:

We now have some further information. My wife has confirmed that she could take her pension and continue in her current role. We also have details of leaving the scheme due to redundancy after age 55. There are two options: she could take a redundancy package and defer the DB pension or she could take a lower redundancy package and receive an undiscounted DB pension. The current thinking is to wait for redundancy and take the second option.

Many thanks to all who responded to my original post - it is appreciated.

Silvertabby

techwatcher wrote: »

An update:

We now have some further information. My wife has confirmed that she could take her pension and continue in her current role. We also have details of leaving the scheme due to redundancy after age 55. There are two options: she could take a redundancy package and defer the DB pension or she could take a lower redundancy package and receive an undiscounted DB pension. The current thinking is to wait for redundancy and take the second option.

Many thanks to all who responded to my original post - it is appreciated.

If by 'undiscounted DB pension' you mean 'unreduced for early payment' then, at your wife's age, that's a considerable bonus - and exactly what we were talking about.