Drawing down on pension early - mid fifties

WackieO

I’m in my mid fifties and have a husband eight years my junior.  I had my son when I was thirty-nine and since he was born have held part time roles within the NHS.  However I gave this up three years ago but have a small income from a rental property.  Over the years I have been enrolled in some workplace pensions.  One is a defined benefit pension and I also have three defined contribution pensions, one of which was set up when I contracted out of SERPS in the 1990’s.. 

As I’m unlikely to return paid employment I’m thinking of taking my pension early but am not sure how to go about planning this and how to avoid leaving myself short in later years.

Would appreciate any advice with this. 

Thanks. 

xylophone

The DB pension is your NHS pension?

When will it be payable without actuarial reduction?

and I also have three defined contribution pensions, one of which was set up when I contracted out of SERPS in the 1990’s.. 

It seems that you have reached (or will soon reach) age 55 so it is very likely that you can access these pensions now.

What details do you have of these pensions?

Providers? Amounts in pensions?

You might find it helpful to arrange an appointment with Pensionwise to discuss your options.

https://www.moneyhelper.org.uk/en/pensions-and-retirement/pension-wise/pension-pot-options

Have you obtained a state pension forecast?

https://www.gov.uk/check-state-pension

What exactly does it say?

Albermarle

As I’m unlikely to return paid employment I’m thinking of taking my pension early but am not sure how to go about planning this and how to avoid leaving myself short in later years.

As you have not provided any figures, how can anyone answer this question?

As above details of the pensions are needed + some idea of your current expenditure and what it might be in retirement.

Also the rest of the family financial situation ( savings , other investments etc ) and your husbands pension situation is obviously important as well. 

WackieO

Thanks for your response.  Gov.uk website says I can get my state pension of £179.60 a week from 2032 and is the most I can get and that it cannot be improved any more. 

The defined benefit pension isn't the NHS pension.  It's managed by Capita and I asked them for some information  re. early retirement and they have given me two options.  The first is a retirement pension of £4203 per annum and the other option is a tax free lump sum of £20K and reduced retirement pension of just over £3K p.a. 

When I looked at information on the Standard Life website - two of my defined contribution pensions are held with them - there's an option to take part of the pot and leave the rest invested.  Does this not apply to a defined benefit pension?  I need to get the figures for the other pensions.  My retirement date for the defined benefit pension is 60 so am wondering if it's better to wait until then but maybe start taking some of the others. 

dunstonh

The defined benefit pension isn't the NHS pension.  It's managed by Capita and I asked them for some information  re. early retirement and they have given me two options.  The first is a retirement pension of £4203 per annum and the other option is a tax free lump sum of £20K and reduced retirement pension of just over £3K p.a. 

And how does that compare to not taking it early and not suffering the reduction?   That information needs to be known in something like this.

there's an option to take part of the pot and leave the rest invested.  Does this not apply to a defined benefit pension?

No.

WackieO

Thanks for clarifying... I think I'll email Capita and see how it compares to not taking it early.

xylophone

Do you also have  NHS DB pension?

Figures?

WackieO

The NHS pension is quite small - I have a statement from 2019 and the pension then was £702 a year or £451 a year if I took the lump sum option but the pension age for this is 65 as it was started much later than my other pensions so would probably leave that one 

xylophone

£179.60 a week from 2032 and is the most I can get and that it cannot be improved any more. 

It will be inflation protected up to and in payment.

Your deferred NHS pension likewise.

Your Capita pension will have been revaluing in deferment and will be at least partially index linked in payment?

What is the value of each of the DC pots?

Where is the DC pot not held by Standard Life?

Albermarle

 two of my defined contribution pensions are held with them - there's an option to take part of the pot and leave the rest invested.  Does this not apply to a defined benefit pension? 

Defined benefit pension- You have built up the right to a guaranteed pension income at a fixed retirement age ( the amount is linked to how many years you worked for that employer and at what salary level) . You can usually exchange some of the pension for a lump sum and/or take the pension early at a reduced level . Once the pension starts it can not be changed and you will have no further input - just the monthly payment will arrive in your bank .

Defined contribution pension - You build up a pot of money . When you want to start taking money from it , you have various options . The standard life website should make it clear what these are .

The DC pension is more flexible, but the guaranteed income from a DB pension is very valuable, more so than most people realise. Operating DB pensions is very expensive for employers , hence why most private sector DB pensions have been closed/frozen .

WackieO

Thanks Albermarle, that's really helpful.  With everything that's going on with inflation at the moment, I'm not going to rush into anything but will get a better idea about what to do after looking into all the pensions I have.