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

stephenadarglas

Yes the reduction for early retirement for this type of pension makes sense.

german_keeper

Sorry redwolf I have probably caused a bit of confusion, I hadn't heard the phrase early retirement clawback before. CS pension schemes use the phrase actuarial reduction,same thing. And Mr C has confirmed that he used the calculators on the CS pensions website which apply the AR. So the figures quoted in the OP have been reduced for early payment.

redwolf

the thing is unless hes on a huge salary or he has very long service 35 + years his pension looks large
his actual pension would have to be 22k at age 56 with say 46% reductions for a 12k pension
rough figures only

german_keeper

I would think the vast majority of the service (to 2015) would be in one of the old CS schemes with Normal Pension Age of 60. I have had a quick look at the AR tables and retiring at 56 looks like 17% reduction to annual pension and 9% reduction to lump sum.

The calculators used are accurate, but of course the correct figures have still to be entered in the correct boxes and I assume they have been.

Any service in the new Alpha scheme with a NPA linked to SPA will of course be subject to much larger reduction.

Mr_Countdown

redwolf wrote: »

the thing is unless hes on a huge salary or he has very long service 35 + years his pension looks large
his actual pension would have to be 22k at age 56 with say 46% reductions for a 12k pension
rough figures only

Thanks for your replies Redwolf.


I definitely don't have a huge salary !! I work four 7.5hour days a week and come out with about £1,650pm which equates to just under £20k a year after deductions.


I've worked there since 1987 so 32 years with the last 10 years working 4 days a week.

atush

Mr_Countdown wrote: »

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 !!

When you did your calculations, did you take into acct the NI you pay now that you wont in retirement?

Mr_Countdown

Hi atush and thank you for your reply.

No I didn’t take into account the NI I currently pay. I just based it on my net monthly pay now and what I could generate monthly in retirement with my pension and dividing my lump sum by the years from retirement to getting state pension.

Are you saying I’ll be better off? It’s late and I can’t get my head round it !!

atush

Basically right now you pay income tax AND NI.

When retired just income tax.

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.

Ok so further to above (and other comments) I've been having a long think about retiring at 56 but deferring taking my civil service pension until 58 and living on savings for those 2 years. Please see the figures in the above post as to the difference in what I'd get between going at 56 or 58.


What I'm struggling to work out (and I've contacted the civil service pension dept who can't help) is what my actual pension would be if I did retire at 56 but not take my pension till 58. In effect I wouldn't be paying into my pension for those 2 years from 56 to 58 so how much would that affect my pension at 58? Would my 58 figure drop that much for those missing payments?


Any help would be much appreciated.

jedk

I'm 57 currently and hoping to retire when I reach 58 next April. I have pensions with the two companies I've worked for long term, 20 years with the first and 15 years with my current employer, the situation is further complicated by the fact I have a defined benefit ( final salary) and a defined contribution as well as a COMPS pot with my former employer.

I have taken the decision to seek professional advice regarding all this and I'm in the early stages of receiving this advice so fees have not been discussed yet but I'm advised by others this won't be cheap.

Your situation may not be as complex as mine but when the tax situation is taken into account a fairly straightforward pension decision can become fraught with the possibility of getting it wrong and costly. I know many excellent commenters are on this forum but just throwing out the fact that professional advice is something to consider.

I'm currently awaiting a letter from my advisor and I'll repost when I get confirmation of what level of fees he's looking at.