LGPS - Question Time

k6chris

"Taking my small LGPS pension 12 years early, would result in a 44% reduction in the amount paid each year, but pay that smaller amount for 12 more years. Do the panel think that taking it early a really stupid idea?"

mollycat

Personally Chris, yes. As much as i hated my job for the final few years I stuck at it till there was no acturial reduction, (55).

Although we manage fine on what we now have, the type of reduction imposed on going early would have made it much more borderline.

My focus in the years where i tolerated tons of "sheet", (spelling error), was to exploit my viable remaining earning potential and accumulate the type of savings that would help bridge the gap between NHS pension and SP. .... for you, age 40+ (assumption), that is one big bridge!!

Unless you are intending to work at something else, your reduced by 44% pension will be the sum you will live on for quite a while.

We have a friend who went at 50 with a similar-ish acturial reduction; sadly she has now had to return to regular work with no end point just at the stage she would have been retiring permanently had she just managed to tolerate those final 5 years. Obviously she greatly regrets it.

If there were health issues at play in the family, or one can simply afford to do it, that would probably change my viewpoint though.

Hope that helps; good luck with your ruminations!

k6chris

mollycat wrote: »

Personally Chris, yes. As much as i hated my job for the final few years I stuck at it till there was no acturial reduction, (55).

Thanks Mollycat. With LGPS the 'no reductions' age, is SPA - which for me is 67. Your are technically right that I am 40+ (55 next month!) This pension is only a small part (about 10%) of my overall post-work finance provision.

Brynsam

Depend entirely on your circumstances. Your call!

Dazed_and_confused

Do LGPS apply inflation increases from 55 or a later point?

Other schemes don't always increase the pension once in payment so maybe worth checking you aren't to be on a flat rate for day the first 5 years.

Silvertabby

Dazed_and_confused wrote: »

Do LGPS apply inflation increases from 55 or a later point?

Other schemes don't always increase the pension once in payment so maybe worth checking you aren't to be on a flat rate for day the first 5 years.

From date of leaving in respect of deferred or ill health/death benefits, from age 55 otherwise.

It's also uncapped.

mollycat

k6chris wrote: »

Thanks Mollycat. With LGPS the 'no reductions' age, is SPA - which for me is 67. Your are technically right that I am 40+ (55 next month!) This pension is only a small part (about 10%) of my overall post-work finance provision.

Aaah; I did wonder that, after I posted.

That puts a whole different perspective on it, all about the sums from a personal finance viewpoint then.

k6chris

Encouraged that no-one has said that a 44% reduction, 12 years early is a really stupid idea (or really bad value)! Still trying to get my head around the decision criteria. Thoughts??

shinytop

My DB pension reduces 4% for each year taken early (before 60) if you want a comparison.

Peelerfart

44% reduction is a lot of course, but I suspect it comes down to affordability.
If you can survive comfortably ish having taken such a hit then hey!
If the jobs getting you down is it worth the grief.

Having recently retired, there is no feeling quite like it
yeah I could have done with a couple more years but it didn't happen. Two more years could have turned into more.
So if you're content with the numbers then why not?

Johnnyboy11

k6chris wrote: »

Encouraged that no-one has said that a 44% reduction, 12 years early is a really stupid idea (or really bad value)! Still trying to get my head around the decision criteria. Thoughts??

Well, I have a deferred LGPS pension, which I plan to start at age 56 and expect a 20% ish reduction, owing to 'Rule of 85' protection kicking-in then. The advantages for me are..

- I can retire very early
- Little or no income tax payable, as pension will mostly be within my personal allowance
- Smooths out back-end loading when the State Pension kicks-in
- Leaves my SIPP and S&S ISA funds earning tax-free in the background
- Plugging the numbers into a spreadsheet suggests I'd need to be drawing breath after age 85 before losing out. I'm happy carrying that risk.


As a bonus, the lump sum element will be recycled back into my SIPP, or my wife's, all within the rules, so I'll/ we'll get a second round of tax relief.


Not sure if I'd jump given a 44% reduction, but the above logic would still apply...