FIREside Chats

Suffolk_lass

hugheskevi said:

Suffolk_lass said:

I do have a complete record with 44 years of (already) accrued State Pension. The benefit of paying to increase is because much of this period (29/30 years) was in an occupational pension scheme where I was opted out of SERPS - so by making voluntary contributions for the missing four years at this end of my (non) working life, it will increase four years worth from the Basic State Pension to "pay into" the New State Pension. 

A complete record in the context of new State Pension for a transition member means entitlement to a State Pension of £185.15 per week (or more) based on pension already accrued. The number of qualifying years is irrelevant.

Yes, exactly the point I am making; just having 44 years already is irrelevant because 30 were opted out. I cannot reach the £185.15 (current year rate of new state pension), even by paying for the four years between stopping work and the April before reaching SPA

CCW007

Almost 5 months into new job.  Have asked for a transfer in value for my LGPS from my previous employer but am tempted to keep it separate from LGPS in new role for a few reasons:

There is a two year pay in requirement, if I leave before that time I will have to take my contributions out or transfer in to a new scheme - not sure what that means for any pots transferred in.  Not planning on leaving but it leaves me vulnerable if I do want / need to leave for any reason.

Keeping as separate pots gives me flexibility to take one pot early and leave the other to SPA if I choose to.  Existing LGPS is around £6.4k at SPA, new pot would be around £15.5k if I stopped working at 55 but left alone until SPA.  (Very rough calculations).

Any considerations I'm missing in the above, any benefits to transferring in I've missed?

With the above, assuming I leave my DB until SPA, that gives me £21.9k of my completely "finger in the air" notional £24k PA target so just over £2k PA plus 12 years to fund assuming I stop working at 55.  SIPP and S&S ISA have understandably taken a hit recently but SIPP was around £160k at one point and ISA around £7k so still got work to do. 

On a separate note, we fixed our mortgage early this year for 10 years at 1.74% so won't be overpaying at all.  Any extra money will go into savings and be offset with a view to clearing the mortgage at the end of the fix (just before we turn 55).  For the first time in years I have opened a cash ISA to avoid paying tax on interest - not been an issue for a long time!

savingholmes

Great win on the 10 year fixed rate @CCW007

hugheskevi

Update from me. My wife and I left work on 26th August and embarked on a trip of up to 2 years on 8th September. First up is an approximately 16-month overland trip from Alaska to Ushuaia. We are in Salt Lake City now, heading toward Las Vegas, almost 4 weeks into the trip.

I don't know if this is early retirement yet (we are 44/45 so relatively young). Still, we certainly won't be returning to work for any significant duration in the future - perhaps just a year whilst we sell our house in London when we return and move out of the city for retirement. I think this is a great way to start early retirement, as it keeps an option open should it be needed (eg if there happened to be a currency crisis and markets tanking while traveling...).

I'm keeping a trip diary on YouTube if anyone is interested - link here, there are 5 episodes uploaded so far, the latest one from Yellowstone went up today.

I'm also keeping a detailed expenditure log of the trip (link here) and trip map (link here). I think that traveling will not cost any more than living in the UK once rental income is factored in, and it is probably going to be cheaper. My wife and I would spend about £30,000 - £35,000 p/a living in the UK and will receive £22,500 in rent each year. I doubt we will spend £1,000 per week while traveling, especially not in less developed countries, so we should be spending less travelling the world than we would if we were living in London. 

Retireinten

CCW007 said:

Almost 5 months into new job.  Have asked for a transfer in value for my LGPS from my previous employer but am tempted to keep it separate from LGPS in new role for a few reasons:

There is a two year pay in requirement, if I leave before that time I will have to take my contributions out or transfer in to a new scheme - not sure what that means for any pots transferred in.  Not planning on leaving but it leaves me vulnerable if I do want / need to leave for any reason.

Keeping as separate pots gives me flexibility to take one pot early and leave the other to SPA if I choose to.  Existing LGPS is around £6.4k at SPA, new pot would be around £15.5k if I stopped working at 55 but left alone until SPA.  (Very rough calculations).

Any considerations I'm missing in the above, any benefits to transferring in I've missed?

With the above, assuming I leave my DB until SPA, that gives me £21.9k of my completely "finger in the air" notional £24k PA target so just over £2k PA plus 12 years to fund assuming I stop working at 55.  SIPP and S&S ISA have understandably taken a hit recently but SIPP was around £160k at one point and ISA around £7k so still got work to do. 

On a separate note, we fixed our mortgage early this year for 10 years at 1.74% so won't be overpaying at all.  Any extra money will go into savings and be offset with a view to clearing the mortgage at the end of the fix (just before we turn 55).  For the first time in years I have opened a cash ISA to avoid paying tax on interest - not been an issue for a long time!

It's worth asking the question of the pension administrators but if you transfer in I believe the two year vesting period becomes null and void.

The other issues to bear in mind is whether you have any final salary element in your deferred scheme or is it all CARE (has this been built up after 2014 or before).  If final salary you'd need to compare your salary in your new role to the salary attached to your deferred pension to see if a transfer would benefit you.  If your old scheme is linked to final salary then you are in line for a bumper boost to your pension this year as your deferred salary will be increased by Sept 22 CPI which is likely to be around 10%. This is assuming the government doesn't intervene and cap it (I have no idea if they could do this but I do have some reservations that we'll get the full CPI increase). Transfer to a current scheme and your annual increases links to your salary again. 

But all this may be irrelevant if your deferred scheme is CARE😊

I have two deferred LGPS schemes and one current. I was under the impression I would need to take them all at the same time whether they were deferred or not, so also worth checking your understanding that you can take them separately is correct too... and I'd be interested to know the answer to this one myself! 

Retireinten

Hugheskevi

Just visited your utube diary and I will definitely watch your trip progress😁.

I'm hoping it inspires me to be a bit more adventurous with our own plans.  The scenery is breath taking and it's something I'd love to see personally but we're definitely home birds. It may well be our adventures remain more UK and Europe based when the time comes. But I would really like to widen our scope for travel if I can. 

earthgirl2

Hugheskevi Thanks so much for posting that and your YouTube diary. So inspiring and really appreciated! Keep us updated. 

Suffolk_lass

CCW007 said:

Almost 5 months into new job.  Have asked for a transfer in value for my LGPS from my previous employer but am tempted to keep it separate from LGPS in new role for a few reasons:

There is a two year pay in requirement, if I leave before that time I will have to take my contributions out or transfer in to a new scheme - not sure what that means for any pots transferred in.  Not planning on leaving but it leaves me vulnerable if I do want / need to leave for any reason.

Keeping as separate pots gives me flexibility to take one pot early and leave the other to SPA if I choose to.  Existing LGPS is around £6.4k at SPA, new pot would be around £15.5k if I stopped working at 55 but left alone until SPA.  (Very rough calculations).

Any considerations I'm missing in the above, any benefits to transferring in I've missed?

With the above, assuming I leave my DB until SPA, that gives me £21.9k of my completely "finger in the air" notional £24k PA target so just over £2k PA plus 12 years to fund assuming I stop working at 55.  SIPP and S&S ISA have understandably taken a hit recently but SIPP was around £160k at one point and ISA around £7k so still got work to do. 

On a separate note, we fixed our mortgage early this year for 10 years at 1.74% so won't be overpaying at all.  Any extra money will go into savings and be offset with a view to clearing the mortgage at the end of the fix (just before we turn 55).  For the first time in years I have opened a cash ISA to avoid paying tax on interest - not been an issue for a long time!

@CCW007 Personally, I would look to keep the LGPS separate. In your post you do not mention that it will be index linked in its frozen state and continue to increase in accumulated benefits as though you were still paying into it. With inflation predicted to run high for a fair while you may find it increases more quickly than paying into the new employer scheme. The cost of managing the LGPS is also relatively low because of the way it is paid for, I believe. If it is like other public sector schemes, there is no actual cash pile invested from which it is paid.

This is why, when HMRC used to send the statement "how your tax is being spent" they used to put it under "benefits" making lots of people assume "scroungers" whereas lower pay has driven the ethos behind public sector pensions for many years. I recall under Thatcher's government, the justification for measly pay increases was that it was considered to be equivalent to 17% of CS pay.

That mortgage fix was well timed! Well done

CCW007

Retireinten said:

It's worth asking the question of the pension administrators but if you transfer in I believe the two year vesting period becomes null and void.

The other issues to bear in mind is whether you have any final salary element in your deferred scheme or is it all CARE (has this been built up after 2014 or before).  If final salary you'd need to compare your salary in your new role to the salary attached to your deferred pension to see if a transfer would benefit you.  If your old scheme is linked to final salary then you are in line for a bumper boost to your pension this year as your deferred salary will be increased by Sept 22 CPI which is likely to be around 10%. This is assuming the government doesn't intervene and cap it (I have no idea if they could do this but I do have some reservations that we'll get the full CPI increase). Transfer to a current scheme and your annual increases links to your salary again. 

But all this may be irrelevant if your deferred scheme is CARE😊

I have two deferred LGPS schemes and one current. I was under the impression I would need to take them all at the same time whether they were deferred or not, so also worth checking your understanding that you can take them separately is correct too... and I'd be interested to know the answer to this one myself! 

Suffolk_lass said:
@CCW007 Personally, I would look to keep the LGPS separate. In your post you do not mention that it will be index linked in its frozen state and continue to increase in accumulated benefits as though you were still paying into it. With inflation predicted to run high for a fair while you may find it increases more quickly than paying into the new employer scheme. The cost of managing the LGPS is also relatively low because of the way it is paid for, I believe. If it is like other public sector schemes, there is no actual cash pile invested from which it is paid.

This is why, when HMRC used to send the statement "how your tax is being spent" they used to put it under "benefits" making lots of people assume "scroungers" whereas lower pay has driven the ethos behind public sector pensions for many years. I recall under Thatcher's government, the justification for measly pay increases was that it was considered to be equivalent to 17% of CS pay.

That mortgage fix was well timed! Well done

Thanks both, some really excellent points there to consider.  It is all CARE so no final salary element to consider.  I will see if I can get in touch with the pension administrators to confirm whether I can take them at different times or need to take them together, I had assumed I could but definitely need to check in that case.

savingholmes

LGPS is a funded scheme unlike some of the others.