Access to Defined Benefits Pension

dunstonh

That still makes sense to me. I don't receive that money until I'm 67.  Even if I lived to age 77,  I probably still wouldn't get 28k over the course of those 10 years. If I even lived that long !!

At 65, it won't be £2k you will get.  That figure will be increased between now and then.    Then it increases in each year of payment.  It will just keep going up and up.

It seems madness to me why anyone would risk waiting for that money. 

Because you are basing it on a level figure that wont increase.   Whereas in reality, that annual income increases.
You are also being very pessimistic about life expectancy.     That is a common mistake. So, you are not alone but when you combine all those things, it is leading you down the wrong financial path.

You are going to have other spending needs in your retirement years.  A state pension alone won't cover them.  Your future self is likely to look back and regret what you did.

Cobbler_tone

Sheba42 said:

dunstonh said:

Realistically, what could I do with 2k per year? 

In 10 years time it could be closer to £3.5k a year.

It makes much more sense to me to take 28k now rather than wait for such a tiny amount that I may not even live to see anyway.  Half of us get cancer now too.  

Nothing you have said so far suggests it makes any sense.   The figures stack up to taking the income being best.

That still makes sense to me. I don't receive that money until I'm 67.  Even if I lived to age 77,  I probably still wouldn't get 28k over the course of those 10 years. If I even lived that long !!

My pension currently sits at 900 per year, so why would I wait,  when I can access 28k right now, while I'm fit and healthy enough to use and enjoy it.  

It seems madness to me why anyone would risk waiting for that money. 

I don't think there is a 'right' or 'wrong' in terms of taking a £900 per annum or £28k lump sum. I'd say it was extremely low risk either way. The more pragmatic view probably leads to a lot of people working to 65+ when they don't have to, unless they want to of course.
I think most people at my age (55) piling big amounts into a pension have fleeting thoughts whether they will ever see the full value of it, as their friends and colleagues pass away. 

I've got spreadsheets coming out of my ears which all say you'll have more money the more you invest, the longer you work, the longer you leave it, the longer you live. The chances are the older you get, the wealthier you'll be and the less money you'll need, unless you are stock piling for your own care needs or plan to take up a very expensive hobby in your final years.

I'd personally say if it will improve your quality of life now...and you are confident that in 20 years time you aren't likely to miss a couple of grand a year (that you'll probably be taxed on) go for it! The small pension could also be an important part of someones future financial planning, so context is everything.
I think Sheba has made their mind up!

Brie

While I'm a big fan of keeping a pension as a pension rather than cashing it in if the levels are as low as stated I wonder if it might keep the OP from claiming things like pension credit at some future date.  Assuming that still exists of course.  So many people have that bit of pension that nudges them just above the limit allowed and miss out on many benefits as a result.

Marcon

FIREDreamer said:

Sarahspangles said:

FIREDreamer said:

Sheba42 said:

p00hsticks said:

Brie said:

A DB pension should send you a annual or biennial statement that outlines what you might be entitled to at retirement.  

I'm not sure that that's true for DB pensions - I have one now in payment and one still to come and although I got/get updates on how the pension scheme itself is doing (i.e. is it overfunded, underfunded, total funds currently coming in and going out, expected liabilities) I haven't had a statement personal to me in particular since the one I was sent on leaving the company, and was under the impression that I shouldn't expect to receive another until close to the Normal Retirement Age.

I've had one every year since I started my job.  Tells me everything except CETV. 

This stops when you leave and the pension becomes deferred.

I can access an annual statement for each of my deferred LGPS schemes in the relevant scheme portal. One of the scheme portals services multiple larger LGPS, I think schemes which don’t automatically generate one must be a minority. One of the schemes can also generate forecasts on demand.

Mine were both private sector and they both closed for future accrual after I left. No online portals. Maybe that makes a difference.

Private sector schemes don't generally waste money on things that most members don't value - and annual statements in deferment fall into that category. They have to send Summary Funding Statements on a more or less annual basis, but those too come into the 'instant recycling' category. Actually read them? Perish the thought!

Silvertabby

Brie said:

While I'm a big fan of keeping a pension as a pension rather than cashing it in if the levels are as low as stated I wonder if it might keep the OP from claiming things like pension credit at some future date.  Assuming that still exists of course.  So many people have that bit of pension that nudges them just above the limit allowed and miss out on many benefits as a result.

Being in receipt of the full State pension (which is set at just £2 over the means test limit) will itself  preclude OP from claiming pension credit and all the other tasty means tested benefits that being in receipt of PC opens the door to.  

Silvertabby

Marcon said:

FIREDreamer said:

Sheba42 said:

FIREDreamer said:

Sheba42 said:

p00hsticks said:

Brie said:

A DB pension should send you a annual or biennial statement that outlines what you might be entitled to at retirement.  

I'm not sure that that's true for DB pensions - I have one now in payment and one still to come and although I got/get updates on how the pension scheme itself is doing (i.e. is it overfunded, underfunded, total funds currently coming in and going out, expected liabilities) I haven't had a statement personal to me in particular since the one I was sent on leaving the company, and was under the impression that I shouldn't expect to receive another until close to the Normal Retirement Age.

I've had one every year since I started my job.  Tells me everything except CETV. 

This stops when you leave and the pension becomes deferred.

I left in 2008 and like I said,  I get a full statement every year !

Interesting. I left 2 defined benefit schemes in 1993 and 2007. I got no further personalised correspondence (only general scheme circulars) until I claimed them early in 2021 and 2019 respectively. Had the LTA not existed I would have left both until normal retirement age, but that’s just unfortunate.

I could work out the updated benefits myself each year using government revaluation orders - it wasn’t a difficult calculation.

It's one of the differences between private and public sector schemes. The latter waste a lot of money sending people annual statements for pensions which are in deferment, which typically hit the bin unread, judging by some of the comments on this website!

When annual deferred statements were returned 'gone away' we had to run an (expensive!) tracing procedure to track the members down.  I suggested that the onus should be 100% on the member to keep us updated with their changes of address, rather than keep wasting money like this.  If they still didn't bother contacting us, then we could just run the one trace at retirement age (deaths were notified by other means).

But I was shouted down on the grounds that under the scheme rules we were obligated to issue annual benefit statements.

Lemon_dr1zzle

Silvertabby said:

Marcon said:

FIREDreamer said:

Sheba42 said:

FIREDreamer said:

Sheba42 said:

p00hsticks said:

Brie said:

A DB pension should send you a annual or biennial statement that outlines what you might be entitled to at retirement.  

I'm not sure that that's true for DB pensions - I have one now in payment and one still to come and although I got/get updates on how the pension scheme itself is doing (i.e. is it overfunded, underfunded, total funds currently coming in and going out, expected liabilities) I haven't had a statement personal to me in particular since the one I was sent on leaving the company, and was under the impression that I shouldn't expect to receive another until close to the Normal Retirement Age.

I've had one every year since I started my job.  Tells me everything except CETV. 

This stops when you leave and the pension becomes deferred.

I left in 2008 and like I said,  I get a full statement every year !

Interesting. I left 2 defined benefit schemes in 1993 and 2007. I got no further personalised correspondence (only general scheme circulars) until I claimed them early in 2021 and 2019 respectively. Had the LTA not existed I would have left both until normal retirement age, but that’s just unfortunate.

I could work out the updated benefits myself each year using government revaluation orders - it wasn’t a difficult calculation.

It's one of the differences between private and public sector schemes. The latter waste a lot of money sending people annual statements for pensions which are in deferment, which typically hit the bin unread, judging by some of the comments on this website!

When annual deferred statements were returned 'gone away' we had to run an (expensive!) tracing procedure to track the members down.  I suggested that the onus should be 100% on the member to keep us updated with their changes of address, rather than keep wasting money like this.  If they still didn't bother contacting us, then we could just run the one trace at retirement age (deaths were notified by other means).

But I was shouted down on the grounds that under the scheme rules we were obligated to issue annual benefit statements.

I know the feeling! 

FIREDreamer

Marcon said:

FIREDreamer said:

Sarahspangles said:

FIREDreamer said:

Sheba42 said:

p00hsticks said:

Brie said:

A DB pension should send you a annual or biennial statement that outlines what you might be entitled to at retirement.  

I'm not sure that that's true for DB pensions - I have one now in payment and one still to come and although I got/get updates on how the pension scheme itself is doing (i.e. is it overfunded, underfunded, total funds currently coming in and going out, expected liabilities) I haven't had a statement personal to me in particular since the one I was sent on leaving the company, and was under the impression that I shouldn't expect to receive another until close to the Normal Retirement Age.

I've had one every year since I started my job.  Tells me everything except CETV. 

This stops when you leave and the pension becomes deferred.

I can access an annual statement for each of my deferred LGPS schemes in the relevant scheme portal. One of the scheme portals services multiple larger LGPS, I think schemes which don’t automatically generate one must be a minority. One of the schemes can also generate forecasts on demand.

Mine were both private sector and they both closed for future accrual after I left. No online portals. Maybe that makes a difference.

Private sector schemes don't generally waste money on things that most members don't value - and annual statements in deferment fall into that category. They have to send Summary Funding Statements on a more or less annual basis, but those too come into the 'instant recycling' category. Actually read them? Perish the thought!

Could work out the revalues benefits myself anyway.

The earliest smallest pension was made non contributory a few months after I joined. It now pays me nearly £4,500 per year with 5% capped CPI inflation. It cost me the princely sum of £75. I think I got a bargain.

Marcon

FIREDreamer said:

Marcon said:

FIREDreamer said:

Sarahspangles said:

FIREDreamer said:

Sheba42 said:

p00hsticks said:

Brie said:

A DB pension should send you a annual or biennial statement that outlines what you might be entitled to at retirement.  

I'm not sure that that's true for DB pensions - I have one now in payment and one still to come and although I got/get updates on how the pension scheme itself is doing (i.e. is it overfunded, underfunded, total funds currently coming in and going out, expected liabilities) I haven't had a statement personal to me in particular since the one I was sent on leaving the company, and was under the impression that I shouldn't expect to receive another until close to the Normal Retirement Age.

I've had one every year since I started my job.  Tells me everything except CETV. 

This stops when you leave and the pension becomes deferred.

I can access an annual statement for each of my deferred LGPS schemes in the relevant scheme portal. One of the scheme portals services multiple larger LGPS, I think schemes which don’t automatically generate one must be a minority. One of the schemes can also generate forecasts on demand.

Mine were both private sector and they both closed for future accrual after I left. No online portals. Maybe that makes a difference.

Private sector schemes don't generally waste money on things that most members don't value - and annual statements in deferment fall into that category. They have to send Summary Funding Statements on a more or less annual basis, but those too come into the 'instant recycling' category. Actually read them? Perish the thought!

Could work out the revalues benefits myself anyway.

The earliest smallest pension was made non contributory a few months after I joined. It now pays me nearly £4,500 per year with 5% capped CPI inflation. It cost me the princely sum of £75. I think I got a bargain.

Good for you. Most people can't - sadly that includes some of those charged with actually administering the scheme! If there's a GMP involved it's particularly tricky, ditto differing rates of revaluation for different periods of service.

Marcon

dunstonh said:

That still makes sense to me. I don't receive that money until I'm 67.  Even if I lived to age 77,  I probably still wouldn't get 28k over the course of those 10 years. If I even lived that long !!

At 65, it won't be £2k you will get.  That figure will be increased between now and then.    Then it increases in each year of payment.  It will just keep going up and up.

It seems madness to me why anyone would risk waiting for that money. 

Because you are basing it on a level figure that wont increase.   Whereas in reality, that annual income increases.
You are also being very pessimistic about life expectancy.     That is a common mistake. So, you are not alone but when you combine all those things, it is leading you down the wrong financial path.

You are going to have other spending needs in your retirement years.  A state pension alone won't cover them.  Your future self is likely to look back and regret what you did.

Don't confuse OP with the facts....they've already made up their mind.