56 year old subject to penalties for accessing pensions

Wiltsmum

Removed as a thread

ggmf

Have you looked through this? https://www.royalmailpensionplan.co.uk/

Linton

A reduction of 5%/year for taking a DB pension early seems a fqairly common reduction. A penalty is hardly unreasonable since the pension will be paid out for longer and there will be less time for the scheme's investments to accumulate.


Pension trustees are required by law to act in the interests of all the scheme's members. This duty will determine whether the early taking of a pension is allowed at all and, if it is, what the terms are. If you read past threads on this forum you will see that the usual recommendation is not to take a DB pension early.

Tom99

Did you expect the pension to be paid for an extra 9 years without any deduction?
5%pa is about the norm.

Wiltsmum

We have read through all the literature. Employed a pension adviser, accountant and spoken to the pension service.

Wiltsmum

Yes, have looked through everything many times. When we ring the RMPP they can't explain it either.

GSP

Wiltsmum wrote: »

Next we were told to transfer it to an open market pension to save being subject to these penalties but apparently they still apply. We are getting nowhere fast and have a house purchase in process. Does anyone know more about these old schemes?

Forgive me as my knowledge on pensions is extremely low, but bit confused by this. Whether a Royal Mail pension is under different rules, but have you asked for a CETV transfer out figure?
I am sure these do not carry any penalties. Of course this would be different to your db pension and you need careful managing of it, but it may give you more options.
To lose half your db pension if you have to leave now is a big figure.
Worth exploring if it qualifies.

Mr.Generous

Lets run some made up numbers.

Pension at 65 £20k

Take it at 55 £10k

So by age 65 you would have been paid £100k
You would have to live 10 years longer to break even.

But you would have had the money while you were younger and healthy enough to enjoy it. Presumably you get a tax free lump sum too, make use of that 10 years earlier.

You could use average life expectancy but isn't it more about quality of life than having a bit more money when your 77?


I'm taking mine at 55. Next year. I can't wait!!

Tom99

Wiltsmum wrote: »

Yes, have looked through everything many times. When we ring the RMPP they can't explain it either.

The 5%pa reduction is referred to on Page 7 of the 'Flexible Pension Guide'

https://www.royalmailpensionplan.co.uk/section-ab/planning-your-future/your-options-different-ages

I have to admit it is tucked away and there is plenty of references before this to being able to take your pension at age 55 before you get to the nitty gritty.

dunstonh

He was shocked to find the figures reduced by 5% for each year under 65

Surprised he is shocked. It has been that way since the dinosaurs.

Next we were told to transfer it to an open market pension to save being subject to these penalties but apparently they still apply.

You wouldnt use an open market option with the Royal Mail pension. Who told you to look at that?

. Employed a pension adviser, accountant and spoken to the pension service.

Unusual to see an accountant. Which pension service did he speak to and what is a pension adviser? The one you would normally go to is an IFA. However, no mention of them (although they wouldnt be able to do anything but explain).

Miiade

Op, you do realise that if you transfer your DB scheme out it has to be to another DB scheme. I very much doubt if they will match the terms of your RM pension which is now government backed. The 5% reduction for early retirement is nothing new and I thought it was common knowledge amongst RM staff.