Taking a DB Pension at 55 with actuarial reduction

ProDave

hugheskevi wrote: »

If the sponsoring employer becomes insolvent and the pension scheme is underfunded, a test is performed to see whether pension benefits equal to or greater than Pension Protection Fund (PPF) level of compensation.

If benefits above PPF levels cannot be secured, the scheme enters the PPF and scheme rules cease to apply, being replaced with PPF levels of compensation which only protect those over normal pension age.

Ah, another case of ,I signed up to a contract expecting a defined set of benefits and circumstances set out in that contract. But at any time in the future someone can tear up the rule book and pull it all out from under my feet.

And they wonder why people are skeptical about pensions,

Scrounger

bluenose1 wrote: »

I left the civil service altogether with 2 years pay, but some got even bigger payouts and started in other civil service departments within months.

Thanks Bluenose, you've got me thinking..
I left the civil service in 2006 with 3 years' pay (CES). :beer:
Currently working in the private sector, contributing 100% of earnings into DC pensions (40% sal sac L&G + 60% HL SIPP) but seriously thinking of retiring soon.

Deferred cs pension is worth about £10k pa @ age 60, should I take it earlier or wait until 60?

Thanks in advance, Scrounger

bluenose1

Scrounger wrote: »

Thanks Bluenose, you've got me thinking..
I left the civil service in 2006 with 3 years' pay (CES). :beer:
Currently working in the private sector, contributing 100% of earnings into DC pensions (40% sal sac L&G + 60% HL SIPP) but seriously thinking of retiring soon.

Deferred cs pension is worth about £10k pa @ age 60, should I take it earlier or wait until 60?

Thanks in advance, Scrounger

The reason I will be taking it at 54/55 is because I will have more requirement for the money before age of 67 when SP kicks in, so much so that it makes retirement at that age feasible.
Trouble is everyone's circumstances are different so you need to decide what's best for you financially, which if you are anything like me involves lots of spreadsheets of the various options.
I used the early retirement estimator to work out the approx reduced amounts payable.

https://www.civilservicepensionscheme.org.uk/media/492799/early-retirement-v1-1-april-2019-locked.xlsm

Bravepants

I'm probably going to take my CS Alpha reduced at age 55, and leave the premium scheme until NRA of 60. I will also use my SIPP to help bridge 55 to 60.



I don't intend to take a pension lump sum.

I also have an ISA to drawdown 3% per annum, but according to my spreadsheet it appears to be optional as I will have the same income without ISA drawdown as I have now with shoving as much possible into pension and investments! Tempting to blow some of ISA money on a camper van!:)


My spreadsheet also shows I could walk out the door at 53 and use the ISA to bridge to SIPP access at 55. That's also very tempting!:)

bluenose1

Still mulling over taking my civil service pension early, though even earlier at 53.5 not 55 as will increase our available money to live on before age 67. My thinking is that for the 3% approx per annum I will lose I can put the annual pension equivalent in a SIPP for either my husband and I and after tax when withdrawing will still earn 6.25%. I am 20 months off being 55 so can potentially consider withdrawing it then.
Really want to retire ASAP but at same time looking to maximise income.

GSP

bluenose1 wrote: »

My logic is that I would rather retire at 55 and have the money while I am young enough to enjoy it.
Know too many elderly people who are cash rich in their mid 70s but have little they want to spend it on.

If you are able to, have you requested a CETV figure on your db pension?

Audaxer

mapleoak wrote: »

Hi - sorry for jumping in but I’m curious as I’m in the Civil Service and will have completed 38 years later in the year and over 55. If my organisation had a voluntary redundancy exercise and I applied and was successful would I get a lump some for redundancy AND potentially a lump sum from my Civil service pension if I chose to “retire” a year so later, or can you only have one or the other?

Many people over 55 who have taken voluntary redundancy from the Civil Service, take their pension at the same time with a pension lump sum as well as the redundancy compensation payment. The first £30k of the compensation payment is tax free, and the whole of the pension lump sum is tax free.

zagubov

It's not a daft idea. Most people I know would rather take the money early to indulge their wanderlust and take holidays while they have the health and mobility to do so before they get too old to enjoy this.

I don't know tons of people in their 80s who travel that much, but many in their 60s and 70s are making good use of their pensions to make their retirement enjoyable.

As the old saying goes, there's no pockets in shrouds!:)

bluenose1

GSP wrote: »

If you are able to, have you requested a CETV figure on your db pension?

It is a civil service pension so I can't get a CETV.

I have decided I am going to request it now and take the actuarial reduction which as others have pointed out is not meant to be punitive.
My plan is to put at least the £2880 into a SIPP for my oh and I, so will get 6.25% return on this. Though won't put it in until towards end of 19/20 tax year, and same again following tax year. I will be able to consider withdrawing it June 21.

My pensions in total will be approx £8k per annum plus my oh pension of £20k. We also have rental income of approx £10k so total income will be approx £38k.
I do have concerns as to whether I should work longer to build up savings and to help the kids out financially if required eg to help towards deposit on house. Though know I am the type who gets totally stressed by work and the sooner I leave for my own mental health the better.

saver_ali

I know nothing about Civil Service pensions so this comment may be completely irrelevant, but there was a glitch when my husband got the quote for taking his private sector DB pension early. The reduction was different depending on whether he was a deferred or active member.

If he had been an active member the reduction would have been 3% per year, equating to 15% for 5 years early.

As a deferred member, the actuarial reduction for taking it 5 years early was over 40%.

So it's punitive for him to take it early and he will have to wait until he's 65.

Hope this doesn't affect CS pensions!