db pension rise

northernstar007

hi all i am approaching 55 in a few months and have a db pension
i hope you guys can help me down the line as i'm going to need some advice
but just a quick question i was having a chat with friend also a member of the scheme and said that the db is triple locked which i said its not its capped at 5%
is it normal to be capped or is it triple locked
also i am getting talked out of taking my pension at 55 due to the reduction i would get
i'm single no kids no ex wives etc and want to enjoy life than going into a job everyday i hate

Flugelhorn

how it is capped or locked is down to the scheme - you need to read the information relating to that scheme. Also check how much the annual pension  is reduced if you take it early and decide if you are happy with that figure

Pat38493

You would need to check the documentation of your DB scheme as each one may have different rules.

It would be pretty unusual for a DB pension to be triple locked like the state pension (partly because there is no rational justification for the triple lock - it’s a political thing - in my opinion of course 😀 )

Also typically the increase in pension in deferment is different to the increase once it’s being paid.  

It’s the same with the early payment of your pension - you need to check the rules and request a pension estimate at normal retirement age and at 55.  Typically there would be a reduction of 4-5% per year you are taking it early.  Whether it’s a good idea to do this depends very much on each individual situation and you have not provided much detail to go on.  Feel free to post here when you have further info

Doctor_Who

If it's anything like my DB pension then various sections (years) may have different links to inflation - some sections are completely uncapped, others have a cap. You will need to get the scheme details to know how your pension rises with inflation.

Keep_pedalling

Each scheme will have its own rules, some pay at 60 some at 65, some increase in line with inflation with no cap others will have will cap the rise. Only the state pension has a triple lock.

Taking a DB pension early will see an actuarially reduction of around 5-6% a year so if your scheme has a normal retirement age of 60 then a 25-30% reduction, double that if it’s at the age of 65%.

This is obviously going to see a massive reduction in your current income but until you obtain an actual statement of what you would receive if leaving at 55 you won’t know if you can survive on this or not. If fully retiring is not financially realistic you could look at semi- retirement with a less hateful job or a part time job to top up any pension.

northernstar007

thanks a lot for all the comments i appreciate them all
ive got my figures for my birthday and all its giving me 3 options take pension no reduction
then a pension with a 25% tax free and pension for life or transfer no figures for that
it also has a 19k avc added to both figures saying this uses up all of your avc
i'm sure its 5% reduction upto 60 then drops to 3%to 62 
would i be better off getting annuity, i also have diabeties take bp tablets and chloestral tablets and smoker
and dont want to leave anything behind
not sure if you guys want figures
also i have a small dc pension sitting at 22k i was going to take that in 1 go in feb (pay the 20%) tax anything left over from the 25% tax free, i will be under the high tax band and then claim my db pension next tax year or year after and live off dc pension for 15 months

Keep_pedalling

Figures would be good including your likely expenditure in retirement.

northernstar007

also if i do want to see about getting a annuity would i need my transfer value and will this need to go through same process as a drawdown which reading off theses boards is a no
will i have to see a financial advisor

Keep_pedalling

northernstar007 said:

also if i do want to see about getting a annuity would i need my transfer value and will this need to go through same process as a drawdown which reading off theses boards is a no
will i have to see a financial advisor

It would require you to use an IFA (if you could find a willing one to do it) but an annuity is highly unlikely to provide you with a better income than the DB pension.

Albermarle

northernstar007 said:

also if i do want to see about getting a annuity would i need my transfer value and will this need to go through same process as a drawdown which reading off theses boards is a no
will i have to see a financial advisor

Transferring to an annuity is probably a non starter. Presume you are thinking that with an ill health annuity you could get a better deal ?
If you take a DB pension early, you of course get the reduced pension for more years. Overall it should break even by the time you reach your early eighties. Although it will vary from scheme to scheme depending on what the early retirement deduction is.

xylophone

Is your scheme guide on the internet and open access?