Defined Benefit Pension Inflexible

numbersrule

I have a small DB pension ( Local Government Pension Scheme ) built up from about 4.5 years service in the 1980s.
The scheme administrators told me that I must take the benefits at my Normal Pension Age ( 60 years of age next July ).
This seems quite inflexible.
I would have preferred to delay taking the benefits until my State Pension Age of 67.
Has anyone else experienced this situation and how do I maximise the forced benefits to improve my overall pension at 67?
I have another DB pension (private company) and I am still paying into a separate SIPP as well as NEST.
Any feedback would be most welcome.

Silvertabby

60 is your normal pension age under the Rule of 85.  Even if it were possible to defer payment (it isn't)  there would be absolutely no benefit in deferring payment beyond this date - in fact, quite the opposite.  

Cost of living increases are applied equally to deferred pensions and pensions in payment. 
Late payment increments, however,  are only added from scheme normal retirement age, which would be 65 for you.  If you were able to defer payment until SPA, then the only addition would be 2 years of late payment increments, a really tiny amount.  

But, In the losses column, would be the 7 years of untaken pension that you would never get back.

Marcon

numbersrule said:

I have a small DB pension ( Local Government Pension Scheme ) built up from about 4.5 years service in the 1980s.
The scheme administrators told me that I must take the benefits at my Normal Pension Age ( 60 years of age next July ).
This seems quite inflexible.
I would have preferred to delay taking the benefits until my State Pension Age of 67.
Has anyone else experienced this situation and how do I maximise the forced benefits to improve my overall pension at 67?
I have another DB pension (private company) and I am still paying into a separate SIPP as well as NEST.
Any feedback would be most welcome.

Pay more into your SIPP, assuming you are currently earning and therefore have scope to do so.

numbersrule

Silvertabby said:

60 is your normal pension age under the Rule of 85.  Even if it were possible to defer payment (it isn't)  there would be absolutely no benefit in deferring payment beyond this date - in fact, quite the opposite.  

Cost of living increases are applied equally to deferred pensions and pensions in payment. 
Late payment increments, however,  are only added from scheme normal retirement age, which would be 65 for you.  If you were able to defer payment until SPA, then the only addition would be 2 years of late payment increments, a really tiny amount.  

But, In the losses column, would be the 7 years of untaken pension that you would never get back.

The Rule of 85 does not apply to me because my service was prior to 01.04.1998.
The scheme normal retirement age is 60.  I have a separate private DB pension which will apply late payment increments starting at 60.  So my query is why is LGPS so inflexible?
Nevertheless, you may be correct that I could gain more by taking and re-investing the benefits but that will only prove to be the right decision if investment performance generally improves.

numbersrule

Marcon said:

numbersrule said:

I have a small DB pension ( Local Government Pension Scheme ) built up from about 4.5 years service in the 1980s.
The scheme administrators told me that I must take the benefits at my Normal Pension Age ( 60 years of age next July ).
This seems quite inflexible.
I would have preferred to delay taking the benefits until my State Pension Age of 67.
Has anyone else experienced this situation and how do I maximise the forced benefits to improve my overall pension at 67?
I have another DB pension (private company) and I am still paying into a separate SIPP as well as NEST.
Any feedback would be most welcome.

Pay more into your SIPP, assuming you are currently earning and therefore have scope to do so.

Yes, I am currently earning.  My NEST pension has performed far better than my SIPP over the last few years, so my current intention is to recycle the LGPS income into NEST.

Happy Xmas!

Marcon

numbersrule said:

Marcon said:

numbersrule said:

I have a small DB pension ( Local Government Pension Scheme ) built up from about 4.5 years service in the 1980s.
The scheme administrators told me that I must take the benefits at my Normal Pension Age ( 60 years of age next July ).
This seems quite inflexible.
I would have preferred to delay taking the benefits until my State Pension Age of 67.
Has anyone else experienced this situation and how do I maximise the forced benefits to improve my overall pension at 67?
I have another DB pension (private company) and I am still paying into a separate SIPP as well as NEST.
Any feedback would be most welcome.

Pay more into your SIPP, assuming you are currently earning and therefore have scope to do so.

Yes, I am currently earning.  My NEST pension has performed far better than my SIPP over the last few years, so my current intention is to recycle the LGPS income into NEST.

Happy Xmas!

Given your age, that may not be a great idea - there's an initial contribution charge of 1.8% on your NEST contributions, which is quite a nibble out of your money, especially if you are planning to access it quite soon (i.e. 6 or 7 years).

Remember that it's not your SIPP that's performed worse than your NEST pension - it's your choice of investments within the SIPP that create the performance. 

numbersrule said:

Silvertabby said:

60 is your normal pension age under the Rule of 85.  Even if it were possible to defer payment (it isn't)  there would be absolutely no benefit in deferring payment beyond this date - in fact, quite the opposite.  

Cost of living increases are applied equally to deferred pensions and pensions in payment. 
Late payment increments, however,  are only added from scheme normal retirement age, which would be 65 for you.  If you were able to defer payment until SPA, then the only addition would be 2 years of late payment increments, a really tiny amount.  

But, In the losses column, would be the 7 years of untaken pension that you would never get back.

The Rule of 85 does not apply to me because my service was prior to 01.04.1998.
The scheme normal retirement age is 60.  I have a separate private DB pension which will apply late payment increments starting at 60.  So my query is why is LGPS so inflexible?
Nevertheless, you may be correct that I could gain more by taking and re-investing the benefits but that will only prove to be the right decision if investment performance generally improves.

Public sector DB pensions are much less flexible than private sector DB pensions, because the sheer numbers involved in the public sector mean that a much greater degree of standardisation (aka inflexibility to frustrated members!), and far fewer discretions, are the only realistic way these giant schemes can be administered.

Flugelhorn

Just take it at 60 - what is the problem, youwon't get any more money by leaving it - I missed a month of my NHS pension (didn't want to resign from job as there was the possibility of redundancy around - gamble failed ) and you can't get it back 

Silvertabby

numbersrule said:

Silvertabby said:

60 is your normal pension age under the Rule of 85.  Even if it were possible to defer payment (it isn't)  there would be absolutely no benefit in deferring payment beyond this date - in fact, quite the opposite.  

Cost of living increases are applied equally to deferred pensions and pensions in payment. 
Late payment increments, however,  are only added from scheme normal retirement age, which would be 65 for you.  If you were able to defer payment until SPA, then the only addition would be 2 years of late payment increments, a really tiny amount.  

But, In the losses column, would be the 7 years of untaken pension that you would never get back.

The Rule of 85 does not apply to me because my service was prior to 01.04.1998.
The scheme normal retirement age is 60.  I have a separate private DB pension which will apply late payment increments starting at 60.  So my query is why is LGPS so inflexible?
Nevertheless, you may be correct that I could gain more by taking and re-investing the benefits but that will only prove to be the right decision if investment performance generally improves.

Scheme retirement age has always been at least 65, although NRD could be 60 (+) for those who met R85.

As a pre 1998 leaver you must take your benefits from NRD, unlike later leavers who could defer if they wished.

numbersrule

Thanks for all your replies - that is much appreciated.