Taking a DB Pension at 55 with actuarial reduction

bluenose1

saver_ali wrote: »

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!

Hi,
That seems so unfair on deferred members, though I suppose pension administrators can do what they like within their terms and conditions.
Has he looked at what the CETV of taking it now rather than waiting until 65. Not sure if it is feasible to consider and all depends on whether an IFA would approve but may be worth checking out. For me taking my pension now is the difference between retiring at 54 rather than 60.

mapleoak

I just got my latest pension statement which I was interested in as I got promoted past year at the ripe old age of 55 so wondered what difference it would make. Wife is 5 years younger than me - she works for CS too - so now considering possibly partial retirement (if agreed) at 60 - 42 years service by then. Perhaps work for 3 years 2-3 days a week then we could both retire me 63 OH 58. I used the partial retirement calculator which suggested I would get £22,500 (and perhaps another £4,000 lump sum) - wife would get around £12,000 a year plus £78,000 lump sum (if she took maximum amount). I could take max lump sum of £130,000 at 60 - if I’ve used calculator correctly. I know some frown at the commutation rate but I would like to clear mortgage other debts and see daughter through university etc. It seems a lot unless I’ve miscalculated. Anyway food for thought.

MakeMoneyWork

I am also in a position where there is an opportunity to take voluntary redundancy due to a reorganisation which has resulted in my job no longer being needed. The organisation does not want compulsory redundancies and would prefer voluntary. Probably for the pension strain costs reason below.
As I will be 59 at the leaving dates being proposed I will get an unreduced pension and lump sum (LGPS).
However, in order to reduce the burden of pension strain costs on the organisation our employer has stated they will be asking staff who apply and are successful in getting voluntary redundancy to pay the strain costs out of their redundancy lump sum.
My redundancy payment would be around £47,000 and my strain costs around £45,000. This will only leave me with a redundancy payment of £2,000.
So my question is, does my employer have to pay at least the statutory redundancy payment (around £19,000 for me) when making someone redundant, even if it is voluntary? Or can they effectively leave you with no redundancy payment? I have read elsewhere that whatever the reason for a redundancy you still retain all your redundancy rights.

zagubov

mapleoak wrote: »

I just got my latest pension statement which I was interested in as I got promoted past year at the ripe old age of 55 so wondered what difference it would make. Wife is 5 years younger than me - she works for CS too - so now considering possibly partial retirement (if agreed) at 60 - 42 years service by then. Perhaps work for 3 years 2-3 days a week then we could both retire me 63 OH 58.

I was wondering if the OP had thought of returning to work part-time to gradually adjust to retirement.

I'm doing precisely that after retiring early. There had to be a gap before I returned to work, otherwise my pension could be clawed back, at least in part. Also, I'm not taking a full pension; that makes a difference. Still paying out for mortgage and student kids.

Needs careful thought as certain job benefits (like life insurance) take a while to kick in once you're re-employed.

Nonetheless there' evidence that the happiest pensioners are the ones that keep working (part-time), and the happiest of those are the ones that keep to the same type of work they did before retirement.

No regrets to date. Keen to keep on keeping on.

mapleoak

That’s why the idea of taking partial retirement “in post” so to speak is attractive in that I might be able to continue what I am doing now - so no need to learn a new job - but simply do less of it, time-wise. I have heard of people taking partial retirement but then being expected to virtually fulfil their previous full time role - but I think that just needs careful management and pushing back when necessary.