It's the Final (salary) Countdown - A simple mans blog !!

Mr_Countdown

Ganga wrote: »

You say you were recently divorced,does your ex not have her eyes on 50% of your pension?

Hi and thank you for your reply Ganga.


At the time of the divorce we signed a consent order so my pension is protected. I don't want to go into details on here but she did very well herself on other finances.

Mr_Countdown

Triumph13 wrote: »

On those numbers I would definitely be deferring for 2 years if at all possible. The difference between the pension you don't receive and the increase in lump sum is only £8,800. It takes less than 7 years for you to be in profit and then you have an extra £1,300 a year gross for the rest of your life.

I see what you are saying Triumph13 but in those 2 years of not taking my pension I will have burned up my L & G pension of £30,000 and maybe a bit more to live on as I really don't want to work past 56 if possible. As such overall I'm not sure I would be better off.

Lummoxley

Mr_Countdown wrote: »

I see what you are saying Triumph13 but in those 2 years of not taking my pension I will have burned up my L & G pension of £30,000 and maybe a bit more to live on as I really don't want to work past 56 if possible. As such overall I'm not sure I would be better off.

Also, I don't think it's viable to defer, I believe you lose the benefit of being able to take the AVC tax free if you separate it from your main LGPS.

Thrugelmir

Mr_Countdown wrote: »

the increase from retiring at 56 or 58 isn't as much as you'd think.
56 is £8730 per year and £58,202 lump sum or
58 is £10,029 per year and £66,858 lump sum.

Apply compound inflation to the figures and the gap will widen further.

Over 25 years the difference in annual income will be sizable.

archer123

Maybe you can stop work early, and defer taking your pension?

We did this many years ago, and had the same dilemmas. Can we survive? Can we take the pension at this time etc. Even ran our original plan on the wife taking her State Pension at 60 - well that never happened! Things will change - but we got by faily easily. 20 yrs on and we still haven't drawn a penny from our pensions (other than 1 x SP)!!

We found costs go down, especially with a plan to living in a warm climate during winter. We don't pay out much on heating bills whilst we are not here, and we save on work lunches and business suits, clothes, travel etc.

But the thing that can give you the confidence to 'go for it' is that you can always make up your money, at anytime, by working! We just got a short-term, part-time job doing something we enjoyed and that helped out without drawing on the 'pot' - which grew in the meantime... and we only needed to do that for a year or two.

Be careful you don't find too many obstacles to put in your way. Live your life!

cfw1994

Mr_Countdown wrote: »

Thank you for the reply and also agreeing that in general it sounds good !!


With regard potential tax payable on the L & G pension I've copied a paragraph from my original post where it shows how I hope to avoid paying any....

"I also need to point out that my work lump sum of £63,684 is tax free and from the £35,000 L & G lump sum the first 25% is tax free. From the remaining £26,250 I am allowed to take a lump sum from this every year so if I took £2,625 every year then added to my work pension of £9,553 I still wouldn’t go over the tax threshold which is currently £12,500."


I hope that makes sense?

Yes you did, & yes it does: said I wasn't feeling too sharp today!

Triumph13 wrote: »

On those numbers I would definitely be deferring for 2 years if at all possible. The difference between the pension you don't receive and the increase in lump sum is only £8,800. It takes less than 7 years for you to be in profit and then you have an extra £1,300 a year gross for the rest of your life.

Added to which he did say "Almost all the family on my fathers side (he was one of 7 children) have either died at around 70, or ended up in homes with dementia etc which I suspect may be a genetic family thing."

I'd suggest if you are pretty sure you will be okay, head off and enjoy the years ahead!

Triumph13

Mr_Countdown wrote: »

I see what you are saying Triumph13 but in those 2 years of not taking my pension I will have burned up my L & G pension of £30,000 and maybe a bit more to live on as I really don't want to work past 56 if possible. As such overall I'm not sure I would be better off.

It depends a lot on how confident you are of being dead or doolally by 70, but even if you are it you would still be quids in by 65 by retiring at 56 and taking the pension from 58 rather than immediately based on the numbers you quoted. The only challenge is cashflow and the obvious way to solve that is by switching to an interest only mortgage (or better yet an offset mortgage), putting the money you save into a pension and paying it off post retirement.

bluenose1

I was going to do the same as you and take my civil service pension at 55, then top it up with my DC pot.
Then after advice on here and several (hundred) spreadsheet calculations of what I would actually receive by my 70s with 3% inflation I decided to live off my DC lump sum first by withdrawing the 25% tax free and then withdraw up until the basic rate personal allowance per year.
Not sure if you are saying your scheme doesn't allow that?

I would also look at the option of taking the maximum pension rather than the maximum lump sum. Then calculate what you will receive by age 70 either way. If inflation goes up you may be glad of the increased guaranteed annual pension.

It really is worth doing the calculations of each option to work out what you would actually receive. Doing this made me realise I would be better deferring taking civil service pension a couple of years.
Saying that I know a couple of people who have cashed their pension in early and that has been right decision for them as they had no savings/ AVCs etc.
Good luck

LHW99

Have you thought of trying to live on what you are likely to have as pension at 56 for 6 months or so, to see how it feels?

Mr_Countdown

LHW99 wrote: »

Have you thought of trying to live on what you are likely to have as pension at 56 for 6 months or so, to see how it feels?

Thanks for your reply LHW99.


I would have £1,419pm at 56 based on the calculations I have done. I currently earn £1,650pm but pay a mortgage of £302pm so my net wage is £1,348pm, so effectively at 56 (mortgage free) I will be £71pm better off.
As such I guess I am living on what I would be at 56 with the only downside being I'm having to work at the moment !!