Should I take my LGPS early?

dont_use_vistaprint

Interested in people’s views on this. 

What are some of the reasons other than Tax to not take your LGPS at age 55 ? 

Has anyone done a calculation of how the reduced income and lump sum   might perform in a SIPP or trading account  (or savings account at 4.6%) for 12 yrs vs leaving it with the government for 12 more years ?

if I’ve interpreted the tables correctly it looks like it’s a 41.8% reduction on pension and a 15.5% reduction on the lump sum for taking it to 12 years early

la531983

You are making an assumption saving interest rates remain at that level for 12 years.

daveyjp

Is this a deferred pension?

dont_use_vistaprint

la531983 said:

You are making an assumption saving interest rates remain at that level for 12 years.

No assumptions - just interested in people’s thoughts and own analysis / calcs 

dont_use_vistaprint

daveyjp said:

Is this a deferred pension?

Yes it is from 2003 to 2014

Nebulous2

I took mine early as I was retiring. I've absolutely no regrets, there have been a couple of decent CPI rises since, more than my previous colleagues have had in pay rises. As a wage slave all my life I was a bit concerned about living off savings / capital and the reassurance of that monthly drop into my bank account is good. 

I wouldn't have taken it if I had still been working though. 

Silvertabby

Would leaving it deferred to age 60 be an option?

You would meet R85 in respect of your pre 2008 accruals then, meaning zero reductions to your lump sum and just 5 years early reductions to your post 2008 benefits   

Johnnyboy11

Some of your service (up to April 2008) will have Rule of 85 protection, which you’d want to benefit from if you choose to start your pension early. The time a pension is deferred also counts towards the rule, as far as I understand. Worth looking into, or use the online calculator in your pension scheme.

dont_use_vistaprint

Silvertabby said:

Would leaving it deferred to age 60 be an option?

You would meet R85 in respect of your pre 2008 accruals then, meaning zero reductions to your lump sum and just 5 years early reductions to your post 2008 benefits   

I’m not sure about this, my understanding for my age & contribution is the pension will be reduced by 41.8% and the lump sum by 15.5% , although having checked again since the change in 2023 the 15.5% of reduction won’t apply to the whole of the lump sum.

it’s very difficult to check things like above they take weeks and weeks to respond to the most simple query.

but I don’t understand how I could meet R85 having only 10.5 years of contributions ? 

dont_use_vistaprint

Nebulous2 said:

I took mine early as I was retiring. I've absolutely no regrets, there have been a couple of decent CPI rises since, more than my previous colleagues have had in pay rises. As a wage slave all my life I was a bit concerned about living off savings / capital and the reassurance of that monthly drop into my bank account is good. 

I wouldn't have taken it if I had still been working though. 

That’s what I am thinking. The only reason not to take it would be if I was being taxed. The CPI rises are very good, it’s grown better than my ISA in sine years!

No one’s seems to be able to give me a valid reason not to take it ? 

Johnnyboy11

Another minor point is to be mindful that the annual CPI uplift is applied in April each year, so you might want to choose a  pension commencement date in say early May, so that the uplift is also applied to your TFLS. Might be around 4% applied in April next year, worth having.