LGSS Pension - Options

jerrysimon

I retired early at 56 two years ago drawing my DB pesnion with the associated reduction for drawing it early.

We were going to do the same with my wifes small LGSS pension (part time working for 20 years) but she carried on working part time, now 58.

I have requested a quote for taking her LGSS pension in October on her 58th birthday as she has now finished working. They have quoted £2500/year £3600 lump sum. I think if we waited another two years it would be work £3100/year plus simlar lump sum. Her part time work paid about the same so giving up this and taking her pension early will make up the shortfall. We have been living off £1650 (no morgage and 40K of savings) these last couple of years fine.

They have also quoted £1837/year but with a £12250 lump sum but at a rate of £12 tfor every £1 reduction in pension this seems a poor option. The fact she will draw it earlier and hopefully longer will make it up over time. A gamble on how long you live I guess.

We had looked at drawing it all out and putting in a SIP (worth £52K) but the advice required for that would cost about 8K so won't bother with that either.

I think we will draw it early like mine and hopefully the benefit of drawing it early and living longer will pay off in the long run.

We both have full NI contributions so with get full state at 67

Any other thoughts/options ?

Dazed_and_confused

We both have full NI contributions so with get full state at 67

Have you actually checked your forecasts on gov.uk. And read past the headline of your forecast is £168.60 to see what your current entitlement is?

xylophone

We both have full NI contributions so with get full state at 67

You have both checked here?

https://www.gov.uk/check-state-pension

Silvertabby

Note that when DWP say 'full NI contributions' they actually mean 'full financial year' and not necessarily 'not contracted out - full rate of NI paid'

jerrysimon

Sorry my mistake mine is the contracted out value. My wife wasn't contracted out and only missing two years so we have topped hers up to get the full value.

molerat

jerrysimon wrote: »

We were going to do the same with my wifes small LGSS pension (part time working for 20 years)

jerrysimon wrote: »

My wife wasn't contracted out

Sets alarm bells ringing. Maybe other factors have helped bring the pension value up but surely she was contracted out with that pension and a COPE value should be showing ?


Are you not making voluntary contributions to bring your pension up ?

Crabby

I have requested a quote for taking her LGSS pension in October on her 58th birthday as she has now finished working. They have quoted £2500/year £3600 lump sum. I think if we waited another two years it would be work £3100/year plus simlar lump sum.

Are you sure that the £3100 quote is for when she reaches 60, not 67?


Mrs C is in a very similar situation, 58 in November, she'll receive about 80% of her pension if she takes it then. If she defers till 60, she'll get approximately 90% (85 year rule kicks in and it only protects pre 2008 pension for people in your wifes age group), but she has to wait till SPA before she'd get 100%. She was going to defer till 60, but she'll be in her mid/late 70s before break even is reached.

jerrysimon

Thanks for the replies and sorry for the delay in getting back.

Just to confirm my wife's figures

1. Yes I made a mistake the £3100 figure is when she is 67
2. According to the NI web site she had 38 years of contributions and would get £154.72/week so we topped it up with 2 years. It wasn't worth paying the 3rd year as it was pence. She wont pay any tax on this and her DB pension so this was a no brainer.


For my figures on the NI web site I have 41 years and will get £130.72/week. I need another 8 years (£6240) to get £164.35/week so have not topped this up yet. I will be paying tax on this and my DB pension. I was not aware you could make monthly contributions and thought I would have to pay the 8 years up front. What kind of monthly figure are we looking at ? I work it out at £65/month ?


Won't it then take me 15+ years (not accounting for pension rises) to recover this money back ?

GunJack

Approx £6.5k for 8 yrs NI, vs. extra £1850 pa SP, so break-even iin around 4 years (rough figures only, and get your added years bought where possible before the price rises)

jerrysimon

Of course thanks, not sure how I worked that out!