Why you should take your pension at 55

pterri

Marcon said:

theoldmiser said:

This only applies to pensions which you are no longer paying into.

For example: if you worked for a company for ten years and left when you were 35, or 45, or 50, and are now working somewhere else, and have a new pension with your new employer - you should start taking your pension from your previous employer AS SOON AS YOU CAN. Which, for many pensions, is the age of 55.

I have spoken to two people in the last two years about pensions, and found out from them that they had worked at a company for twenty years, but changed jobs ten years ago, and they are now 60 years old, and I asked them if they had started taking their old company pension when they were 55. They said "Oh no, I thought I should wait until I retire, which will be when I'm 66". Then I told them that they had lost five years of that pension money already, and I told them that it isn't going to be increasing by anything more than inflation each year, because they aren't paying anything into it each month.

I know many people who are over 55, who don't even want to talk about their pensions, as if it's a taboo subject. I started planning my retirement when I was 45, and I retired at 55, taking my pension immediately. It's incredible that so many people have pensions which they SHOULD start taking at 55, because they are no longer paying into them, and if they wait until they actually retire, which could be at 66 or 67, they will literally lose ten years of that pension, it's crazy.

You're hopelessly wide of the mark in terms of accuracy - and you appear to be giving regulated advice when you aren't a regulated individual.

You've also failed to spot the fact that the minimum age for taking a pension will soon increase to 57.

DB pensions increase in deferment, even though someone is no longer paying in to them. The date when someone left active membership impacts on which parts of their pension increase and by how much.

If a DB pension is taken early (ie before the scheme's NRA), there is almost always an 'early retirement reduction factor'.

If it is taken after NRA, there is almost always a late retirement factor, in addition to inflationary increases. There are a tiny number of schemes where money not taken by NRA is lost (eg the 1995 NHS scheme), but they are very much in the minority.

Please don't propagate what is quite frankly dangerously misleading nonsense. 

Absolutely, and it’s almost certainly a decision you cannot reverse? Currently pondering whether to take mine early at 57 or the schemes NRA at 60. 

Marcon

pterri said:

Marcon said:

theoldmiser said:

This only applies to pensions which you are no longer paying into.

For example: if you worked for a company for ten years and left when you were 35, or 45, or 50, and are now working somewhere else, and have a new pension with your new employer - you should start taking your pension from your previous employer AS SOON AS YOU CAN. Which, for many pensions, is the age of 55.

I have spoken to two people in the last two years about pensions, and found out from them that they had worked at a company for twenty years, but changed jobs ten years ago, and they are now 60 years old, and I asked them if they had started taking their old company pension when they were 55. They said "Oh no, I thought I should wait until I retire, which will be when I'm 66". Then I told them that they had lost five years of that pension money already, and I told them that it isn't going to be increasing by anything more than inflation each year, because they aren't paying anything into it each month.

I know many people who are over 55, who don't even want to talk about their pensions, as if it's a taboo subject. I started planning my retirement when I was 45, and I retired at 55, taking my pension immediately. It's incredible that so many people have pensions which they SHOULD start taking at 55, because they are no longer paying into them, and if they wait until they actually retire, which could be at 66 or 67, they will literally lose ten years of that pension, it's crazy.

You're hopelessly wide of the mark in terms of accuracy - and you appear to be giving regulated advice when you aren't a regulated individual.

You've also failed to spot the fact that the minimum age for taking a pension will soon increase to 57.

DB pensions increase in deferment, even though someone is no longer paying in to them. The date when someone left active membership impacts on which parts of their pension increase and by how much.

If a DB pension is taken early (ie before the scheme's NRA), there is almost always an 'early retirement reduction factor'.

If it is taken after NRA, there is almost always a late retirement factor, in addition to inflationary increases. There are a tiny number of schemes where money not taken by NRA is lost (eg the 1995 NHS scheme), but they are very much in the minority.

Please don't propagate what is quite frankly dangerously misleading nonsense. 

Absolutely, and it’s almost certainly a decision you cannot reverse? Currently pondering whether to take mine early at 57 or the schemes NRA at 60. 

Once a DB pension is in payment, you can't reverse your decision.

Cobbler_tone

I looked at taking mine now (55) but no logical reason to do so. I already contribute to a highish level to keep under 40% in my DC pot with same employer, plus things like the spousal element will continue to grow and RPI increases to 2.5%/5%.
That advice was taken from conversations and understanding on this site, so not all bad guidance.
Now I am over 55 I can watch it increase each month on the portal, so makes it a bit more tangible.

theoldmiser

LOL. "Please don't propagate what is quite frankly dangerously misleading nonsense."

Would you like to elaborate? When did I say there WASN'T an 'early retirement reduction factor'?

Here is an example from a Local Government Pension Scheme, of the reductions - but these only apply if you are STILL PAYING INTO THOSE PENSIONS - i.e., if you carry on working and paying into THAT pension until you are 67, you will get, for example, £20,000 a year. And if you stopped paying into that pension ten years ago and wait until you are 67 to take it, you obviously do NOT get £20,000. Do you not agree? So the important thing is to work out how much you would get over the years from 55 to 67 (or 57 to 67 if you wait for the earliest date you can take your pension to change). In my case it would have been over £100,000 - why would I wait until 67 to start taking my pension, when it was only going to go up by inflation each year, from the 55 year old figure?

Number of years paid early	Pension Reduction	Lump sum reduction (for membership to 31 March 2008)
0	0.0%	0.0%
1	4.9%	1.7%
2	9.3%	3.3%
3	13.5%	4.9%
4	17.4%	6.5%
5	20.9%	8.1%
6	24.3%	9.6%
7	27.4%	11.1%
8	30.3%	12.6%
9	33.0%	14.1%
10	35.6%	15.5%
11	39.5%	not applicable
12	41.8%	not applicable
13	43.9%	not applicable

Perhaps you would like to EXPLAIN yourself a bit more, but I expect that's too much to ask on here. The usual "you're wrong", or even "you're DANGEROUSLY wrong", but no actual factual rebuttal, no figures, no explanation.

All the usual rubbish: "You're hopelessly wide of the mark in terms of accuracy - and you appear to be giving regulated advice when you aren't a regulated individual."  None of that rebuts anything I've written, it's just name calling and meaningless. Try telling us WHY I'm wrong, and precisely where, with figures to back up what you're saying.

I said people are losing ten years of their pension if they wait until 67 (obviously ONLY for older pensions they are no longer paying into) because that is precisely the truth. Where do you think those unpaid monthly payments go? You don't suddenly get them all when you are 67. Your pension doesn't go up by some magic 'extra amount' when you are 67, just because you didn't start taking it when you were 55.

theoldmiser

elsien said:

Mine can’t be touched until the age of 60. 

Is that your only pension, or is it a pension from a previous job, which you are no longer paying into? I am ONLY talking about pensions which you are no longer paying into.

theoldmiser

Albermarle said:

QrizB said:

That's an interesting opinion.

Aren't most pensions actuarily reduced if you take them earlier than normal pension age for the scheme? So, by taking a pension at 55, you might receive ~half as much as you would expect at 65?

If you check the OP's profile, they have a number of 'interesting opinions' .

What a brilliant rebuttal of everything I've said.

theoldmiser

MX5huggy said:

theoldmiser said:

This only applies to pensions which you are no longer paying into.

For example: if you worked for a company for ten years and left when you were 35, or 45, or 50, and are now working somewhere else, and have a new pension with your new employer - you should start taking your pension from your previous employer AS SOON AS YOU CAN. Which, for many pensions, is the age of 55.

I have spoken to two people in the last two years about pensions, and found out from them that they had worked at a company for twenty years, but changed jobs ten years ago, and they are now 60 years old, and I asked them if they had started taking their old company pension when they were 55. They said "Oh no, I thought I should wait until I retire, which will be when I'm 66". Then I told them that they had lost five years of that pension money already, and I told them that it isn't going to be increasing by anything more than inflation each year, because they aren't paying anything into it each month.

I know many people who are over 55, who don't even want to talk about their pensions, as if it's a taboo subject. I started planning my retirement when I was 45, and I retired at 55, taking my pension immediately. It's incredible that so many people have pensions which they SHOULD start taking at 55, because they are no longer paying into them, and if they wait until they actually retire, which could be at 66 or 67, they will literally lose ten years of that pension, it's crazy.

Massive over simplification of what are complex rules and regulations across different pension types and schemes. 

The advice should be to understand your pensions and what options you have and the costs of those options long before you are 55 so you can retire when you want with the money you need to for the life you want. 

Thank you, another brilliant rebuttal. Talk about stating the bleeding obvious.

theoldmiser

Brie said:

Don't forget too that some people may be paying the lower income tax amount but taking a pension might push them into the higher rate which is a waste of money.  

Also to look for guaranteed periods.  My OH will get a set amount if I die before him from my DB pension.  The DC ones, depending how you take them, might only guarantee a payment if I die within 10 years or something.    

Have any of you bothered to work out how much your 'no longer paying into' pension would be at 55, per year, and work out how much you would receive if you took it at 55, until you were 67?

theoldmiser

QrizB said:

That's an interesting opinion.

Aren't most pensions actuarily reduced if you take them earlier than normal pension age for the scheme? So, by taking a pension at 55, you might receive ~half as much as you would expect at 65?

This is only if you are STILL PAYING INTO THE PENSION until you are 65! How much clearer could I have made my original post, but still most of you don't even seem to understand basic English.

If you have stopped paying into a pension before you are 55, if you wait until you are 65 to take it, instead of taking it at 55 (presuming you are able to take it at 55), then you are not going to get double the amount at 65 - unless inflation goes up by so much over those ten years, that it just happens to equal double what it was at 55 - though it will be worth exactly the same as it was when you were 55.

If you continue to PAY INTO the pension until you are 65 (which is NOT what I am talking about), then of course it will be double at 65, what it would have been if taken at 55. Nobody is arguing against that.

theoldmiser

By the way, I know that pensions are complicated, and that they are all different, this is ALL I was suggesting:

If you have an OLD pension which you are no longer paying into, first find out the earliest age you can take it. (Ooh, scary, DANGEROUS information apparently.) Let's say this is 55. It might be 60, it still applies.

Find out how much you would get per year if you took it at 55.

Put that into a spreadsheet and multiply it by 3% (or whatever your pension calculator says it will go up by each year) for each year, and add up the total.

Now look at the projected figure you would receive if you waited until you were 66 to take your pension. This will have increased only by inflation, or an estimated percentage close to inflation (i.e. highly unlikely to be 10% a year!). Bear in mind that you will STILL get that figure at 67, whether you started taking your pension at 55 or waited until you were 67. Otherwise, if you are NOT PAYING INTO the pension any more, where is all the extra money going to come from?

ps re Marcon's smart !!!!!! comment: "You've also failed to spot the fact that the minimum age for taking a pension will soon increase to 57."

from: https://www.lgpsmember.org/your-pension/planning/taking-your-pension/

"The Government has announced the earliest age that you can take your pension will increase from age 55 to 57 from 6 April 2028."

So only three years away, no time for anybody to possibly take their pension at 55 before then, I see... (sarcasm) Nor any time, i.e. three years, to lose three years of pension payments if you happened to be between 55 and 63 right now.