Which month is best to retire in

mark55man

That's complicated, but clear.  @zagfiles I hope you could be kind enough to check my logic
The revaluation order is as follows
1/1/2009 -> 31/12/2020 : 23.6%
1/1/2010->  31/12/2020 : 25.3%
1/1/2011 -> 31/12/2020 : 21.5%

The inflation in Sep 2009 was -1.4%.  In Sep 2010 was 4.8% and in Sep 2011 was 5.2%

So if I have understood correctly.  In mid 2010 I left my scheme (the company replaced the DB scheme with a DC one and I became a deferred member of the DB scheme).  Then I should aim my retirement (or commencement of the DB) to be later in the year so that I get the 25.3% uplift rather than the 23.6%. 

Had leaving my DB scheme been one year later (ie in mid 2011 - I would want to aim my retirement to be early in the year so  get the 25.3 and not the 21.5)

sheslookinhot

zagfles said:

sheslookinhot said:

zagfles said:

hemeloid said:

I think for completeness it is worth mentioning that with those with DB pensions, there may be rules in play that could affect timing of retirement, such as application of actuarial reduction and application of annual indexation.

Yes see this thread, timing of taking DB pension can make a big difference: https://forums.moneysavingexpert.com/discussion/5962314/rules-on-using-occupational-pensions-revaluation-orders/p1

Hello 
can you explain this timing of taking DB pensions for a simpleton. What is the significance of your actual retrial date. Is it relative to you birth date, anniversary of joint the scheme or some other date ?
( I would intend to retire 6 May 2022, birthday and joined scheme both in August. I will defer taking pension until April 23 to benefit from a Late Retirement Factor.)

It's explained in the linked thread, and above. It's complicated, I can't explain it any better than I already have. What specifically don't you understand? Or give an example.

Ah, maybe it’s clearer. Is this only applicable for folks who have got a deferred DB pension ? 

zagfles

sheslookinhot said:

zagfles said:

sheslookinhot said:

zagfles said:

hemeloid said:

I think for completeness it is worth mentioning that with those with DB pensions, there may be rules in play that could affect timing of retirement, such as application of actuarial reduction and application of annual indexation.

Yes see this thread, timing of taking DB pension can make a big difference: https://forums.moneysavingexpert.com/discussion/5962314/rules-on-using-occupational-pensions-revaluation-orders/p1

Hello 
can you explain this timing of taking DB pensions for a simpleton. What is the significance of your actual retrial date. Is it relative to you birth date, anniversary of joint the scheme or some other date ?
( I would intend to retire 6 May 2022, birthday and joined scheme both in August. I will defer taking pension until April 23 to benefit from a Late Retirement Factor.)

It's explained in the linked thread, and above. It's complicated, I can't explain it any better than I already have. What specifically don't you understand? Or give an example.

Ah, maybe it’s clearer. Is this only applicable for folks who have got a deferred DB pension ? 

Yes........

zagfles

mark55man said:

That's complicated, but clear.  @zagfiles I hope you could be kind enough to check my logic
The revaluation order is as follows
1/1/2009 -> 31/12/2020 : 23.6%
1/1/2010->  31/12/2020 : 25.3%
1/1/2011 -> 31/12/2020 : 21.5%

The inflation in Sep 2009 was -1.4%.  In Sep 2010 was 4.8% and in Sep 2011 was 5.2%

So if I have understood correctly.  In mid 2010 I left my scheme (the company replaced the DB scheme with a DC one and I became a deferred member of the DB scheme).  Then I should aim my retirement (or commencement of the DB) to be later in the year so that I get the 25.3% uplift rather than the 23.6%. 

No. Starting DB early this year gets you 21.5%, ie 1/1/2011 -> 31/12/2020, ie 10 years inflation because you deferred 10 complete years. Starting DB late this year gets you 25.3% for 11 complete years, so 11 years' inflation 1/1/2010->  31/12/2020

Had leaving my DB scheme been one year later (ie in mid 2011 - I would want to aim my retirement to be early in the year so  get the 25.3 and not the 21.5)

Definitely not!

It'd be 21.5% late or 15.5% early (Jan 2012-Dec2020)

If you left mid 2009 then early could be better as Sept 2009 inflation was negative.

It's inflation in the year you leave that's the important thing, that's the year's inflation you gain if you retire late in the year and lose if you retire early in the year.

mark55man

Thank you - I will have another go at working it out so I understand properly.  Plenty of time.  I think though for year in question I am better off later in both.  The 2009 was a hypothetical to show how (badly) I (badly mis)understood it, but not applicable 

mark55man

OK - so I've been busy with the online (scheme specific) modelling tool my company provides. And for me, in my specific circumstances, predicting my DB benefit late in the year than the anniversary of my leaving it in 2010 means I get a 3% increase in the quote I get (from the on line tool) than predicting the DB between January and that anniversary. 

I literally put a date in the day before the anniversary and the day after, and the amount jumped up overnight as it were.  Which is good to know.

Now we can get back to worrying about when I start the drawdown of my SIPP a good couple of years before that. 

jamesd

Does this also affect CETVs?

mark55man

I'm not sure @jamesd.  I have asked for 3 CETVs so far, but they would always have been at the 3% Up basis, as I asked after my Birthday which is later than my departure date from the scheme.  So presumably that is the number they would have used, unless they used the normal retirement date

Tony4625

mark55man said:

OK - so I've been busy with the online (scheme specific) modelling tool my company provides. And for me, in my specific circumstances, predicting my DB benefit late in the year than the anniversary of my leaving it in 2010 means I get a 3% increase in the quote I get (from the on line tool) than predicting the DB between January and that anniversary. 

I literally put a date in the day before the anniversary and the day after, and the amount jumped up overnight as it were.  Which is good to know.

Now we can get back to worrying about when I start the drawdown of my SIPP a good couple of years before that. 

Just tried my DB estimated figures and I got around a 3% increase on the anniversary of deferring compared to the previous day 2/3/2023 (been deferred since 2/3/2007)...interesting to know🙄

mark55man

Thanks Tony. 
Once in payment, my schemes adds an annual cost of living allowance (coincidentally) around the time the pension became deferred.  So if I go before the anniversary I get the COLA and if I go after I get the revaluation boost.  I will try and see if there is a way of getting both!  Your scheme may vary.

I think this means I need to worry about inflation in the year I take it as to which is best, and will probably act in a way that slightly decreases my 3% advantage given inflation is around 2% at the moment and possibly rising with post pandemic / post brexit costs