Advice re BBC pension (old benefits)

AliceDonald

Hi all, I'd welcome advice on the following. I turn 60 in July and have the option of taking my BBC pension (I was at the BBC 1991-2005 so am under the old benefits scheme). I am now employed as an academic and not planning to retire until summer 2026 at the earliest. I earn just over £70k gross.
I do not need the cash lump sum so am wondering whether it is better to take the pension from Jay this year and save / invest the money or defer it and benefit from the late payment uplift (although this is not specified in the letter from the BBC pension scheme). If I take the pension this year I would lose some of it in tax given my earnings but I am unsure how to calculate how much, and therefore which option is most advantageous. 
Any advice welcome, thank you.

Marcon

AliceDonald said:

Hi all, I'd welcome advice on the following. I turn 60 in July and have the option of taking my BBC pension (I was at the BBC 1991-2005 so am under the old benefits scheme). I am now employed as an academic and not planning to retire until summer 2026 at the earliest. I earn just over £70k gross.
I do not need the cash lump sum so am wondering whether it is better to take the pension from Jay this year and save / invest the money or defer it and benefit from the late payment uplift (although this is not specified in the letter from the BBC pension scheme). If I take the pension this year I would lose some of it in tax given my earnings but I am unsure how to calculate how much, and therefore which option is most advantageous. 
Any advice welcome, thank you.

First thing to do is establish the facts. Does the scheme offer a late payment uplift and if so, how much would it be?

Easy enough to calculate the tax position. What is your current marginal rate of tax - given your earnings it is likely to be higher rate https://www.gov.uk/income-tax-rates 

If you change your mind about taking tax free cash, then any tax free cash from the BBC scheme is just that: tax free. Actual BBC pension payments for the rest of the tax year in which you turn 60 (July 2025 to 5 April 2026) will be taxed at the relevant rate, which will be higher rate next tax year if you are still earning £70K or a bit more. 

jayencee

When I came up to retirement age the bbc paid for me to have a chat with a financial advisor to go through all possible options before deciding what to do.  I was still working elsewhere at the time.  Check the letters you have received from the pension scheme

daveshep26

Marcon said:

AliceDonald said:

Hi all, I'd welcome advice on the following. I turn 60 in July and have the option of taking my BBC pension (I was at the BBC 1991-2005 so am under the old benefits scheme). I am now employed as an academic and not planning to retire until summer 2026 at the earliest. I earn just over £70k gross.
I do not need the cash lump sum so am wondering whether it is better to take the pension from Jay this year and save / invest the money or defer it and benefit from the late payment uplift (although this is not specified in the letter from the BBC pension scheme). If I take the pension this year I would lose some of it in tax given my earnings but I am unsure how to calculate how much, and therefore which option is most advantageous. 
Any advice welcome, thank you.

First thing to do is establish the facts. Does the scheme offer a late payment uplift and if so, how much would it be?

Easy enough to calculate the tax position. What is your current marginal rate of tax - given your earnings it is likely to be higher rate https://www.gov.uk/income-tax-rates 

If you change your mind about taking tax free cash, then any tax free cash from the BBC scheme is just that: tax free. Actual BBC pension payments for the rest of the tax year in which you turn 60 (July 2025 to 5 April 2026) will be taxed at the relevant rate, which will be higher rate next tax year if you are still earning £70K or a bit more. 

First thing that springs to mind is, you may be concentrating on the wrong pension(?)

The BBC and one university have been amongst jobs I’ve had - to my mind, I would be thinking about the period post retirement (from academia- in 2026 or thereabiuts?) due to the reasonably significant early retirement factors on your USS pension  (I would have thought you may be looking at 3- 5 year reduction may be applying if you leave at 61- could be 3- 5 years relevant - which would be 15%- 25% ish level)

I actually took my BBC pension early (55) to help the effort to stuff as much as possible into ISAs and pensions up to age 60 - and then mainly draw those funds and take my Uss pension (& another) closer to NRA- (I actually also did this because of the old LTA rule which taking DB early helped alleviate, with hindsight that may have been harder judgement to make)

this may not be suitable for you OP - / you may have these types of ‘pots’ already - but I think your retirement period to about 65 is the key phase for how are you going to fund/ drawdown?

BBC old benefits does have late retirement factors https://www.bbc.com/mypension/current-members/old-benefits/ - I found the pension scheme very efficient and business like when I el3cted to take my pension HTH DS