Final salary pension advice

AlanP_2

An IFA is unlikely to be a great deal of help with DB pensions as that is not their bread and butter work.

TBH I think you will need to create a s/sheet and look at the income and lump sum for each pension and each year COMPARED TO what you want / need, factoring in the relevant Early Retirement Factors.

I'd go all the way up to SP age at least.

What about overall financial situation - spouse / partner, debts / mortgage, dependents etc.

Not a great deal of help to you I know but across all the scheme members the ERFs are broadly neutral compared to waiting until normal retirement age. Unfortunately none of us are totally average so whichever way you go you could win or you could lose depending on when you pass away.

HIA

No debts/mortgage and will have savings/inheritance of £110k by the end of the year.  Spouse pays council tax and I pay everything else. Can get by on £1500/month. One adult child still at home but no dependants.

QrizB

One playing-it-safe approach would be to make sure your state pension plus DB pensions are enough to cover your £1500/month, £18k pa. Assuming you get the full £9k pa state pension, you''d need your DB to also pay £9k pa. You've not said what your DB pensions are worth but if it they're in excess of £9k pa at normal pension age, you should be able to work out how early you can take them and still get £9k pa.

happyc84

Hi, I'm in a similar situation, looking at the option to take  DB pension early and  adjust spending to SP date.
If the Op takes their DB pension early, they might get a tax-free amount plus a reduced pension.
The reduced pension should increase each year so I would check with your pension admin, and put  the figures into a spreadsheet. 

Albermarle

happyc84 said:

Hi, I'm in a similar situation, looking at the option to take  DB pension early and  adjust spending to SP date.
If the Op takes their DB pension early, they might get a tax-free amount plus a reduced pension.
The reduced pension should increase each year so I would check with your pension admin, and put  the figures into a spreadsheet. 

Normally with a DB pension you get the option of a tax free lump sum and a reduced pension , whether you take it early or not .
It is up to you whether you take the lump sum ( most do as it is cash in hand ) or the larger pension .
Normally the 'commutation factor ' is about 20 to 1 . As the lump sum is tax free then it is more like 23 to 1 . So in simple terms you have to live 23 years to benefit from not taking the lump sum . Some pensions, like the Local Government scheme, only have a commutation factor of 12:1 which is poor value .

arty688

Albermarle said:

Generally people seem to be more pessimistic about how long they will live , compared to the actual statistics.
If you are late Fifties now , then on average you should live until you are 83/84. So that means you have a 50% chance of living longer than that , especially if you are reasonably healthy , have no really bad habits and have money .

To add a dose of pessimism or realism out of the 50% that are still alive at 84 are really living well ? and how many of those wish they had spent a bit more money in their 60's and 70's ?

Albermarle

arty688 said:

Albermarle said:

Generally people seem to be more pessimistic about how long they will live , compared to the actual statistics.
If you are late Fifties now , then on average you should live until you are 83/84. So that means you have a 50% chance of living longer than that , especially if you are reasonably healthy , have no really bad habits and have money .

To add a dose of pessimism or realism out of the 50% that are still alive at 84 are really living well ? and how many of those wish they had spent a bit more money in their 60's and 70's ?

The usual answer to this is that spending can actually increase for some people as they get into their eighties . Probably less leisure spending, but more on cleaners, gardeners , care workers, expensive retirement villages , private medicine etc
Although the last two  would only apply to the more prosperous segment of retired folk .

arty688

I still bet most people would say they wish they had the flexibility to spend a bit more when they could enjoy it...

HIA

This is why I've stopped work at 57. I've found out I need to pay 2 years voluntary ni contributions, roughly £1600, to get my state pension up from £171/week to full £179/week. I won't get it till 67 so gambling on living to 71 to break even. This was a surprise as I've been working public sector and paying ni for 37 years so I didn't expect to be short.

 

Dazed_and_C0nfused

You are under transitional rules for State Pension so having stopped work it's not surprising you need to buy extra years to reach £179.60.

You were able to pay less NI for most of the period you were employed but still get the chance to reach the new State Pension standard amount, a winner under the new system