Levelling pension calculation

Mozza001

So a friend is taking his pension early at 55, final salary with a reduction.

He's waiting his quote, and I was talking to him about levelling pensions.

Can anyone advise if this type of pension can be taken so early?

Ayr_Rage

It'll depend on the scheme rules.

I took my final salary company pension at 56 and that has included an optional levelling payment which expires when my state pension becomes payable next year at age 66.

I could not take it at 55 due to not meeting the minimum number of years in employment (29) but the option would have been available in my scheme at 55 to those with enough service.

The levelling payment is currently £7993 having increased annually by CPI

My state pension, after have purchased 6 missing years, will be £11305 so a nice increase next February.

Phossy

My pension scheme allows a levelling option even when taken early.

Mozza001

Thanks.

His scheme is Imperial Tobacco, anyone know if they allow this?

I think he would have the full years to qualify.

Anyway of working out how much the levelling part would be?

IE how much per year on top of company pension until state retirement age?

Mozza001

Ayr_Rage said:

It'll depend on the scheme rules.

I took my final salary company pension at 56 and that has included an optional levelling payment which expires when my state pension becomes payable next year at age 66.

I could not take it at 55 due to not meeting the minimum number of years in employment (29) but the option would have been available in my scheme at 55 to those with enough service.

The levelling payment is currently £7993 having increased annually by CPI

My state pension, after have purchased 6 missing years, will be £11305 so a nice increase next February.

So you get 8 grand on top of company pension to state pension age?

Ayr_Rage

Mozza001 said:

Ayr_Rage said:

It'll depend on the scheme rules.

I took my final salary company pension at 56 and that has included an optional levelling payment which expires when my state pension becomes payable next year at age 66.

I could not take it at 55 due to not meeting the minimum number of years in employment (29) but the option would have been available in my scheme at 55 to those with enough service.

The levelling payment is currently £7993 having increased annually by CPI

My state pension, after have purchased 6 missing years, will be £11305 so a nice increase next February.

So you get 8 grand on top of company pension to state pension age?

@Mozza001, correct.

I am very lucky, my pension gets uncapped RPI increases annually and the levelling payment increases by CPI, also uncapped.

June 2015 pension £36254 plus levelling payment of £6029

Current pension £53583 plus £7993 

xylophone

Does he have his scheme guide?

https://myimperialpension.com/library/

Mozza001

xylophone said:

Does he have his scheme guide?

https://myimperialpension.com/library/

No, long gone

But he started mid nineties 

Phossy

Mozza001 said:

Thanks.

His scheme is Imperial Tobacco, anyone know if they allow this?

I think he would have the full years to qualify.

Anyway of working out how much the levelling part would be?

IE how much per year on top of company pension until state retirement age?

You can do a rough estimation.

From 55 to 67, there will be an additional £138,000 (12 x £11,500) to be paid out by the scheme. That's not free money, that comes out of the total pot and will be recouped over the period from retirement to expected death, lets assume from 55 to 84, so 29 years or £4759 per year (138000/29). Therefore  until age 67 there will an additional payment of 11,500 - 4759  (£6741). From age 67 the pension will be reduced by £4759. 

It's a rough estimate based on todays numbers, and assume the pot is big enough to accommodate.
In my own case my calcs were very close to the schemes quoted figures. 

xylophone

No, long gone

Get one from link above?

FIREDreamer

Ayr_Rage said:

Mozza001 said:

Ayr_Rage said:

It'll depend on the scheme rules.

I took my final salary company pension at 56 and that has included an optional levelling payment which expires when my state pension becomes payable next year at age 66.

I could not take it at 55 due to not meeting the minimum number of years in employment (29) but the option would have been available in my scheme at 55 to those with enough service.

The levelling payment is currently £7993 having increased annually by CPI

My state pension, after have purchased 6 missing years, will be £11305 so a nice increase next February.

So you get 8 grand on top of company pension to state pension age?

@Mozza001, correct.

I am very lucky, my pension gets uncapped RPI increases annually and the levelling payment increases by CPI, also uncapped.

June 2015 pension £36254 plus levelling payment of £6029

Current pension £53583 plus £7993 

That’s a cracking pension to have. Well done. Must have been a well above average salary to get that. If I annuitised the rest of my SIPP I would get close to £50k. Just retired at 60. Will annuitise at age 70 or so.