Decision on early retirement/redundancy 11 March at 6:33PM edited 11 March at 7:25PM in Pensions, annuities & retirement planning 19 replies 1.9K views

AliceBanned

Hi 
I have been unhappy in my job for a while (burnt out and toxic atmosphere) and now we are going through a restructure. I was told that I and two others are at risk of redundancy, but there are vacancies in the team - we have to get promoted to get one of the new roles, but I am already acting up into that grade.

I can't decide what to do as I've been unhappy there for a while but the money is quite good and I still have a £170k mortgage on my own. I have no dependents. My union told me that as I am 55 they won't make me redundant, but I can choose not to apply and then I am automatically redundant and pension strain will kick in (local gov pension scheme). They will pay me a fixed redundancy sum of £7k on top of that.

It is very tempting to me, to just say I've decided to take early retirement (with intention of rejoining the workforce pretty soon, after a break as I've been quite down and stressed due solely to work.

I have an opportunity to leave and still have an income, albeit minimal. I can rent out a spare room as well so I am sure I will cover the mortgage for at least a few months.

 I hadn't intended on giving up work at this point or ever retiring early, but being on the LGPS makes this tempting as I would actually get a fixed sum annually from whenever I leave until I die due to employer deleting my post. I might not get this opportunity. I have only worked there for 5 years at around £45-51k for that time per annum.

I also thought I could use the time to retrain and go into something completely different for a while.  Am I living in a fantasy world/crazy? I enjoy the income but have had so much stress there!  There are other toxic issues and I fear I won't get the job I want anyway because of certain peers deciding and a previous process that was as far from transparent as you can get.

. I estimate pension would be £8-10k, not enough to live off but a decent amount to receive at 55 and will cover the mortgage and it will feel like I've taken power back and cost them.

I guess I need the exact amount to make a decision, but not sure the employer can be forced to let me know?

I live in the South East. 

It feels a bit reckless (and exciting) to be contemplating leaving like this!

Kim1965

What other pensions or savings do you have?
 Sounds like you can take redundancy and get another job, but its not clear that you can afford to retire. 

tacpot12

It's not clear whether the fixed sum you say you will be paid annually (because your post has been deleted) is a significant amount. It's value will decrease over time due to inflation. 

If you lose your job, it sounds like you would be in the same situation financially that you would be if you didn't apply, and it does sound like you are ready to move on.

I think you need to honestly evaluate your ability to get work at the same level of pay as you earn current. I would not recommend retraining. You won't command any like the salary you are on as a new starter in a field other than the one you work currently work in. Any new job (in your current field) will be sufficiently different to your current job to make it feel like you are making a new start. 

I would also not recommend taking too long a break from work. I think three weeks would be ideal. Use the first two weeks to go on a holiday somewhere you can unwind, and then do a "clearing the decks"/spring clean at home in the final week so that you can set about job hunting in earnest. (This assumes that they are expecting you to be fully productive up to your final day, and don't send you on garden leave.)

There would seem to be nothing to stop you getting a lodger now, and I would suggest doing so will give you more flexibility if you were to lose your  job. Steel yourself to pay everything they give you to repay the mortgage. 

Do you have any debts? I notice your signature suggests that you do, and that you might need some of your redundancy lump sum to clear some/all of these. 

gwynlas

I would normally advocate for early retirement but your figures look very low considering your mortgage debt. Can you get assurance in writing that you will receive an annual figure and how it will be increased over time? What means do you have to clear your mortgage prior to statutory pension age? Yes you could go down rent a room scheme but this would mean sharing your home. If all figures work out you could take on another role at reduced salary.

Dazed_and_C0nfused

I have only worked there for 5 years at around £45-51k for that time per annum.

I estimate pension would be £8-10k, not enough to live off but a decent amount to receive at 55

Not an expert on LGPS but this seems a bit optimistic based on a 1/49th accrual rate.

And that's before any potential reduction for taking it at 55.  

What does your latest pension statement show?

This may have been for the period to March/April 2022 so whatever that is you will be able to add around £1k for 2022:23 plus there is usually an inflation increase with CARE schemes.

Which might be significant this year.

AliceBanned

Dazed_and_C0nfused said:

I have only worked there for 5 years at around £45-51k for that time per annum.

I estimate pension would be £8-10k, not enough to live off but a decent amount to receive at 55

Not an expert on LGPS but this seems a bit optimistic based on a 1/49th accrual rate.

And that's before any potential reduction for taking it at 55.  

What does your latest pension statement show?

This may have been for the period to March/April 2022 so whatever that is you will be able to add around £1k for 2022:23 plus there is usually an inflation increase with CARE schemes.

Which might be significant this year.

There’s no reduction for taking it at 55 apart from payments I would have paid in to 67. Employer has to pay my pension as though I’d already reached 67. Which may not be loads but would mean I don’t have to earn as high a salary so could look for something more enjoyable and less pressure. 

Thanks I’ll take a look at latest statement when I can - visiting family at mo.

AliceBanned

Thanks Kim I have a separate pension pot from previous employer worth £90k at mo. Have not so far taken money out.

my intention was to retire then return to work. I haven’t planned for this and don’t want to stop working.

on the other hand if I stay with this employer they pay better than most local gov and they offer a lot of training and development. So could stick it for say a few years more then resign but would then not get early pension.

Fermion

The organisation does seem to have engineered unusual criteria for the redundancies, which may be equivalent of constructive dismal. I would talk to your union and then afterwards HR to see if they should be offering you a compromise agreement (legal agreement where they pay extra money on top of normal redundancy payments in return for you agreeing not to take them to a tribunal - they also would fund free legal advice) 

I was in a redundancy situation myself aged 59 but in my case I decided to do contract work till retirement ( age 67) - best employment decision I ever made. Your company would offer you outplacement help and advice if you did decide to take up redundancy. 

Best of luck

Laycity

I also think your figure seems high if you have only 5 years service at 50K a year salary - even with the no actuarial reduction for being made redundant. 

Have you had previous roles with LGPS contributions? How are you getting the figure of 8K - 10K per year? Are you using their online calculator?

AliceBanned

Laycity said:

I also think your figure seems high if you have only 5 years service at 50K a year salary - even with the no actuarial reduction for being made redundant. 

Have you had previous roles with LGPS contributions? How are you getting the figure of 8K - 10K per year? Are you using their online calculator?

It’s a guesstimate! Based on my current pension from LGPS would be £14k per year if I carried on contributing and retired at 67. If I left now out of choice it would be £4k.  

AliceBanned

Fermion said:

The organisation does seem to have engineered unusual criteria for the redundancies, which may be equivalent of constructive dismal. I would talk to your union and then afterwards HR to see if they should be offering you a compromise agreement (legal agreement where they pay extra money on top of normal redundancy payments in return for you agreeing not to take them to a tribunal - they also would fund free legal advice) 

I was in a redundancy situation myself aged 59 but in my case I decided to do contract work till retirement ( age 67) - best employment decision I ever made. Your company would offer you outplacement help and advice if you did decide to take up redundancy. 

Best of luck

Thanks Fermion. The head of dept’s rationale is that he wants to give us all the higher grade! After blocking me from reasonably achieving it for 2.5 years - two managers harassed me. It’s been truly awful and my union rep even said to me ‘if they wanted to get rid of you now’s there chance’!!! So he is probably not holding his breath though he told me he thought they would recruit me into one of the posts. As I am acting up into the grade - but even then making my eventual promotion  interim is very dubious as I scored the highest and a substantive employee had left a vacancy.