interest rates and pension

snowlaser

northernstar007 said:

thanks a lot all for them answers, i ment its over 30k transfer value
i still would rather move it to a drawdown in my shoes and lifestyle etc and no reductions as its been said on here of i think its 3% per year i lose for retiring early also no ex`s no kids the co going to be laughing 

When you say you "lose" money for retiring early what actually happens is you get an early retirement reduction because you're drawing the same money over a longer time.

In other words, if your pension scheme's normal retirement age is 60 you might have been expected to live to age 90 (say) i.e. draw your pension for 30 years.  But if you retire at age 55 you're drawing it over 35 years instead.  If it wasn't reduced for early payment you'd just get 5 "extra" years of pension, which is more than you're entitled to.

So it's reduced.   Even very roughly you could imagine 30/35 = 0.857 i.e. just under a 15% reduction for 5 years early, which is close to the 3% per year that you mentioned.

Overall the company expects to pay you the same money, just spread over ages 55-90 now instead of 60-90.

They won't be laughing, it's just a respreading of the same money.

So by all means speak to an IFA if you want to consider transfer out and drawdown, but don't do it just because you see the 3% reductions as bad value / a punishment / a loss.