FIREside Chats

savingholmes

It sounds like you've both done a huge amount for the cost. Really exciting times for you and lots of memory making @hugheskevi

Your ongoing plans sound wonderful.

Cornish_mum

Great to hear your updates hugheskevi; very inspiring! I just checked our numbers and assuming on average a 2.5% return above inflation we are on track for FIRE in 15 years. CM

Suffolk_lass

There is a lot of trailing of pension-changes policy ideas being trailed in the Sunday papers - Are people doing their own "what if?" analysis to consider the possible impacts?

Yesterday's thing was freezing the amount of your TFLS at 25% of the previous lifetime allowance - which is trailed as a stealth tax on bigger pots

I was reminded as @hugheskevi says he will take pensions at 55 and I recently read that 10 years before state retirement age was going to be the limit, before which the tax burden is retrospectively applied to the withdrawal at current year tax rate, plus the burden of the tax relief it received going in on top. The tax burden has not changed but the age has, from 55 when SPA was 65, to 68, unless the scheme has reserved rights that trump legislative changes.

hugheskevi

Suffolk_lass said:

There is a lot of trailing of pension-changes policy ideas being trailed in the Sunday papers - Are people doing their own "what if?" analysis to consider the possible impacts?

Yesterday's thing was freezing the amount of your TFLS at 25% of the previous lifetime allowance - which is trailed as a stealth tax on bigger pots

I was reminded as @hugheskevi says he will take pensions at 55 and I recently read that 10 years before state retirement age was going to be the limit, before which the tax burden is retrospectively applied to the withdrawal at current year tax rate, plus the burden of the tax relief it received going in on top. The tax burden has not changed but the age has, from 55 when SPA was 65, to 68, unless the scheme has reserved rights that trump legislative changes.

The freezing of the TFLS is actual policy, not a policy idea. This is to be done as part of the removal of the Lifetime Allowance.

In my case, my standard minimum pension age would be 57, but both my DB and DC pensions (and this is my wife) have protected minimum pension ages. We can access our DB pensions from age 50, but the scheme rules rights would apply a very harsh actuarial reduction due to the way inflation is treated and hence we will not access then until age 55 when the actuarial reduction does not include that inflation penalty. We will take our DC pensions as soon as we can, at age 55.

The standard minimum pension age will increase to 57 in 2028. Although stated Conservative policy is to set it 10 years prior to State Pension age, this is not in legislation.

What if questions are very important, especially for DB schemes members. I left my DB scheme to benefit from the rules calculating final salary based on past salary prior to the recent high inflation. This means I get full inflation increases. The vast majority of my colleagues have no idea they have reduced the real value of their pension by not leaving the scheme - it wouldn't be the right thing to do for all, but for many close to retirement it would have been a good decision.

Anyone affected by the McCloud judgment in the public sector should also be thinking of whether they have a contingent decision argument to bring forward (ie would they have done something different had they remained in a pre 2015 scheme).

savingholmes

@hugheskevi
I don't fully understand the McCloud decision - and as far as I am aware many scheme providers haven't issued their response yet - so there's a lack of clarity. Can you expand?

hugheskevi

savingholmes said:

@hugheskevi
I don't fully understand the McCloud decision - and as far as I am aware many scheme providers haven't issued their response yet - so there's a lack of clarity. Can you expand?

The McCloud judgment was that younger members suffered age discrimination as they were forced to move to 2015 schemes before older members. Government argued the discrimination was justified, as older members were closer to retirement. The judgment was that the Government had failed to demonstrate the discrimination was justified - especially as younger members were more affected by the change as they had less time in the old schemes and would have more time in the new schemes, so if anyone was to be protected it should have been younger members.

To remedy the discrimination, affected members will be given a choice for their 2015-22 membership, either to be in their pre-2015 scheme or their post 2015 scheme. This decision will be made at retirement (or within the next few years for members who have already retired, who will get a retrospective decision).

Most schemes have amended rules, or will do so in the coming weeks (eg Civil Service has consulted on draft rules). But for the vast majority, the detail isn't really very important, it is just implementing what I've described above. There is no lack of clarity - members must be offered a choice of scheme membership for the Remedy period, that choice is made at retirement, or if already retired the choice will be offered by April 2025.

For some members, contingent decisions may be relevant. This is where a member would have done something different had they not suffered discrimination. For example, perhaps a member was purchasing Added Pension prior to 2015, purchasing an amount set to avoid the Annual Allowance. When they were moved to the 2015 scheme (which usually has a higher pension input due to higher accrual but with higher normal pension age), they would have reduced their Added Pension purchase. Whereas if they had not been discrimated against (ie not been moved to 2015 scheme) they would have purchased more Added Pension. Hence they would make a contingent decision arguing this and request to be allowed to retrospectively purchase more Added Pension.

savingholmes

Thank you for that - it is the clearest explanation I've read. Just gone and checked my provider - they will work out which I'd have been better off with and apply it to me after Oct 23. However - my retirement age changed when they changed the scheme from FS to CARE - is that also protected (i.e. would I get less reduction for taking part of my pension early) - are they reverting to an age 65 date for that part of my pension? 

hugheskevi

savingholmes said:

Thank you for that - it is the clearest explanation I've read. Just gone and checked my provider - they will work out which I'd have been better off with and apply it to me after Oct 23. However - my retirement age changed when they changed the scheme from FS to CARE - is that also protected (i.e. would I get less reduction for taking part of my pension early) - are they reverting to an age 65 date for that part of my pension? 

If you choose your pre-2015 pension scheme for the period 2015-22, then it comes with the relevant Normal Pension Age (65).

If you choose your post-2015 pension scheme for the period 2015-22, then it comes with the higher pension age.

savingholmes

hugheskevi said:

savingholmes said:

Thank you for that - it is the clearest explanation I've read. Just gone and checked my provider - they will work out which I'd have been better off with and apply it to me after Oct 23. However - my retirement age changed when they changed the scheme from FS to CARE - is that also protected (i.e. would I get less reduction for taking part of my pension early) - are they reverting to an age 65 date for that part of my pension? 

If you choose your pre-2015 pension scheme for the period 2015-22, then it comes with the relevant Normal Pension Age (65).

If you choose your post-2015 pension scheme for the period 2015-22, then it comes with the higher pension age.

Really good to know. Thanks for replying 

ElmoR

Hello FIREsiders

I've been out in the wilderness for a while and thought it would be a good time to pop back to the FIREside for a cosy chat    Been dropping in mainly to see where in the world is @hugheskevi

How is everyone doing? Ignoring the current balance numbers of accounts at the moment? I am.

Stuff keeps happening which makes FIRE planning quite the challenge. On the plus side, the mortgage being paid off has meant that we can support our daughter through uni - she is having a wonderful time, just begun her second year now! Just as she started uni last year, literally one week later, my Father passed away. The official processes involved (without a will) have all slowed to the pace of a snail doing the paperwork and we are still dealing with the estate / house sale etc.

Work also became unbearable (again). Those who read my thread will remember the misery that work often involved. I had managed to take a mini-promotion role (lovely to have the salary bump, all bunged into pension obviously!), and was happy-ish for 2 years or so. (Where did all that time go?). Then there were changes at work again and I just had enough, applied for new jobs and got one, starting on Wednesday No hanging about. Another small salary bump, guess where that's going! The new job is commutable but 75 minutes ish each way and on dodgy A roads where there's even a sign telling you how many people died on the road over the past year. Ouch.

Hopefully you have kept up so far. I barely have. I have "life whiplash".

This is the FIRE part...there's some complicated maths/decisions involved. Move to a new home nearer my new work place seems like a sensible thing to do, I don't want to be a statistic on that road sign after all. 

Do we buy a home of similar value to this one, or go for our dream/retirement home? That might mean another small-ish mortgage which I could in theory overpay and ensure is completed before reaching 60 years old, if we went at it hammer and tongs/proper frugal. There's complicated USS (with 3 different bits/rules) v possible change to the TPS pension issues too - I'm on holiday for a couple of days and this is one of my tasks to try to wrap my head around.

I shudder to mention the greenhouse (though I had some excellent tomato crops this year). I guess we have to leave it here and set up a new one...

Not sure where everyone is on their FIRE journey, but I'm at (almost) 55 yo and was hoping to go at 60. It briefly seemed possible until USS changed the pension scheme, but now they changed it back! The changes in work/home adds more uncertainty to consider, but the lack of increase in the passive funds over the past two years also makes me wonder if we are entering a trough and won't be coming out/recovering in time for age 60 yo. Eeep. I know it means that you simply carry on working until the finances become OK. Is anyone else in the same age bracket/boat?

take care all,

ElmoR xx