Seeking bit advice on my own pension

Mick70

Afternoon all .

Long and short

I was kicked out of final salary pension 2019 BUT had protected rights and pension was triggered  (even though didn’t get 40/80ths I did get the years I had paid in , 32 I think it was? No penalties).  

I Had the offer of a £1.7M CETV and unfortunately it all fell through right near the end, at time I felt like I had lost a lottery ticket.

Still currently in full time employment, although at times very stressful and would like to retire age 56 (3 years) , sometime in 2026. My wife would be 59 then, she is a low earner doing manual tiring work.   We would both rather retire while in good health, rather than in our 60s.

 So June 23 - 

 

Mick - Age 53

DB Pension          £29.8K pa, rising yearly with rpi but unfortunately is capped at 5%

Royal London DC pot       £182k

Vanguard 60:40 s+s isa   £58k

 

Spouse -  Age 55 (soon 56)

Bank savings                                              £118k   (includes £80k tax free lump sum from my pension, which I had to keep at arms length for 3 years)

Vanguard 60:40 s+s isa                             £63k     

Vanguard Traget Age retirement 2030       £60k

 

So about £480k combined (£240k each)    and,   the DB pension £29.8k pa (on death spouse gets 60%).

 

I/we would be looking to use the 4% rule on draw down in 3 year time, then would reduce that when we receive State Pensions.

It may not be as good as the £1.7m CETV but I have gone without any luxuries the past 5 year and worked extra hours etc to ensure we get this built up quickly and think it now looks decent , I think anyway ??

 I do have concerns that too much is simply in the bank but there is no way around this .  and following another post on here today I have some concern now about the vanguard 2030 retirement fund and if we should be looking to transfer all of this into a different vanguard fund (ie 60:40), unsure if you are actually able to do this,   or if that won’t make much difference anyway.  And if I should amend any future pension payments so going into 60:40 pension fund within vanguard and not the target age retirement fund ?

 

Any feedback on any of this is greatly appreciated

 

Mick

Pat38493

Have you double checked your state pension entitlements online on gov.uk and both have full state pensions?

Also for the DB pension, can you clarify a bit more what you mean by "triggered" - do you mean it is already in payment?  If not, upon what retirement date is the 29.8K figure based and is it in today's money?

Do you have a picture of your spending needs in retirement per year as a couple i.e. how much you actually need?

Mick70

Yes both entitled to full SP  (think i possibly have one more year full NI to contribute)
by triggered , I receive it,   so currently receive salary and my pension which is currently £29.8k pa and will rise annually.
Because of that it is unlikely we will want an annuity . more likely drawdown

xylophone

I was kicked out of final salary pension 2019 BUT had protected rights and pension was triggered  (even though didn’t get 40/80ths I did get the years I had paid in , 32 I think it was? No penalties).  

Membership began in around 1987 - presumably you have pre and post 88 GMP?

You say that the pension is index linked to 5% RPI - at the moment this is the whole of the pension?

Will this change at age 65 to no increase on pre 88 GMP, up to 3% CPI on post 88 GMP and up to 5% RPI on the excess?

And remember that RPI as an index is set to be dropped from 2030.

Does your wife have a workplace pension?

Or are you saying that she has chosen the Vanguard within a workplace pension?

Mick70

xylophone said:

I was kicked out of final salary pension 2019 BUT had protected rights and pension was triggered  (even though didn’t get 40/80ths I did get the years I had paid in , 32 I think it was? No penalties).  

Membership began in around 1987 - presumably you have pre and post 88 GMP?

You say that the pension is index linked to 5% RPI - at the moment this is the whole of the pension?

Will this change at age 65 to no increase on pre 88 GMP, up to 3% CPI on post 88 GMP and up to 5% RPI on the excess?

And remember that RPI as an index is set to be dropped from 2030.

Does your wife have a workplace pension?

Or are you saying that she has chosen the Vanguard within a workplace pension?

the whole of my pension (currently 29.8k) rises with rpi each April, however is capped at 5% each year. I am not aware of any changes when i turn 65 , however i am aware that in future is likely to change to cpi (for all pensions i think).
My wife is self employed and is a low earner, i pay into a vanguard target retirement pension fund for her but am limited by her earnings on how much can get in each year.  She will be 56 soon and the work is tiring , hopes to retire at 59 and ideally i would like us to retire together , sometime in 2026, if need me i would work another year until 2027 when i would be 57, but ideally 2026.
still gutted we didn’t get the £1.7m CETV but trying hardest to make up 

Pat38493

Mick70 said:

xylophone said:

I was kicked out of final salary pension 2019 BUT had protected rights and pension was triggered  (even though didn’t get 40/80ths I did get the years I had paid in , 32 I think it was? No penalties).  

Membership began in around 1987 - presumably you have pre and post 88 GMP?

You say that the pension is index linked to 5% RPI - at the moment this is the whole of the pension?

Will this change at age 65 to no increase on pre 88 GMP, up to 3% CPI on post 88 GMP and up to 5% RPI on the excess?

And remember that RPI as an index is set to be dropped from 2030.

Does your wife have a workplace pension?

Or are you saying that she has chosen the Vanguard within a workplace pension?

the whole of my pension (currently 29.8k) rises with rpi each April, however is capped at 5% each year. I am not aware of any changes when i turn 65 , however i am aware that in future is likely to change to cpi (for all pensions i think).
My wife is self employed and is a low earner, i pay into a vanguard target retirement pension fund for her but am limited by her earnings on how much can get in each year.  She will be 56 soon and the work is tiring , hopes to retire at 59 and ideally i would like us to retire together , sometime in 2026, if need me i would work another year until 2027 when i would be 57, but ideally 2026.
still gutted we didn’t get the £1.7m CETV but trying hardest to make up 

The pension you are receiving is pretty high so even $1.7m might not have been that great over the long term.  Also - up until recently it would have exposed you to LTA charges.

Based on the figures you are quoting are you a higher rate taxpayer?  If so, you might possibly be better off increasing your own pension contributions rather than paying into one for your wife - have you done any calculations there - you will get 40% tax relief for that I guess.

If I was in your situation based on the significant DB pension and state pensions that you have, I would be looking to see if it made sense to have a higher equity allocation 80% or higher.  Also you might be able to draw out more than 4% per year if you expect to draw significantly less after SP pensions kick in.  You can use modelling spreadsheets or software to take a look at this (or ask a financial adviser to do it if you don't want to research it all).

But as I said above, it would also be very useful to try to look at it in terms of what you actually need to spend and what you expect to spend during retirement as well as just from what  you have available.

Mick70

Thanks pat and yes I have been maxing out my DC pension the last 3 year (40k pa) and will get 60k into it this year 23/24 now the limit has been raised 

xylophone

I am not aware of any changes when i turn 65 , 

Do you have pre and post 88 GMP as part of your pension?

Have you checked the scheme guide re any change to indexation at age 65?

https://techzone.abrdn.com/public/pensions/Tech-guide-guaranteed-min-pen

Mick70

When you reach GMP age 65 part of the scheme pension built up before April 1997 will be replaced by a Guaranteed Minimim Pension (GMP).

The GMP -   On or after May 2035 (age 65), the scheme will
pat increases on the GMP built up after 5 April 1988 of £653.64 in line with price inflation up to 3% a year .  The scheme will not pay increases on the GMP built up before 6 April 1988 

NO IDEA WHAT THE ABOVE MEANS BIT FOUND IT ON MY ORIGINAL PENSION STATEMENT 

Mick70

xylophone said:

I am not aware of any changes when i turn 65 , 

Do you have pre and post 88 GMP as part of your pension?

Have you checked the scheme guide re any change to indexation at age 65?

https://techzone.abrdn.com/public/pensions/Tech-guide-guaranteed-min-pen

See above post , it does mention age 65 , unsure what means 

xylophone

See above post , it does mention age 65 , unsure what means 

See link in my previous under

Increases in payment.

 At age 65, the Scheme Administrator will advise you how your pension in payment is split between pre 88 GMP, post 88 GMP and excess over GMP.

From then on, the pre 88 GMP will not be increased by the Scheme and the post 88 only up to 3% CPI.

The excess will increase by up to 5% RPI/RPI replacement.