Pension Increase Exchange

kempiejon

Marcon said:

You're confusing two things: retirement age (factors are calculated with the intention of being cost neutral at any age, whether retiring early, at NRA or after NRA); and the PIE exercise which triggered this thread.

You're also asking a question which is unanswerable - depends on when you actually die, and also rates of inflation.

Thank you. I had previously understood the PIEs were of no particular benefit to the individual and had conflated the ideas of the actuarial reductions for age. Good catch as I was getting confused and tripping over myself.

GMPEqCommenter

Gary1984 said:

As a trainee actuary I used to help price these things up. Just be aware it's being offered to you by the scheme in order to save them money, not to give you greater flexibility or anything like that.

@Samuelsjourney: Have you been told what share of the value of the pension increases you're being given when they calculate the increase in your pension? 

100% value means your pension is still worth the same amount (relative to the assumptions they've used in the PIE), and it's therefore mostly about flexibility (and the fact that you can take more of a tax free lump sum, which is usually beneficial to the Scheme's finances and not necessarily detrimental to yours depending on how the tax and commutation factors work out). 

80% (say) means you're effectively losing 20% of the value of your pension increases. It might still be worth it to you under some circumstances (e.g. if your life expectancy is significantly lower than would be normal for someone of your age or you need more money now and won't need it later), but it's less likely.