Take DB pension early,

Linuxgeek

Am I missing something here I'm 57 next month and plan to go at 60 

In the mix I have a small final salary that's forecast to pay around £4kpa at 65 

But found out if I take it next month they will pay me £3k pa so that's £24k before I get to 65 

Yes it's taxable but would just pay 3k it into my current DC pension for the next 3 years my current company will even put 6% on top

eskbanker

By accepting a lower rate in return for starting earlier, you win before 65 but lose thereafter, i.e. you're just 'robbing Peter to pay Paul' and the total amount paid out is likely to be broadly similar either way.

Linuxgeek

eskbanker said:

By accepting a lower rate in return for starting earlier, you win before 65 but lose thereafter, i.e. you're just 'robbing Peter to pay Paul' and the total amount paid out is likely to be broadly similar either way.

I'd have to live to 88 to be worse off cant imagine living that long tbh 

eskbanker

Linuxgeek said:

eskbanker said:

By accepting a lower rate in return for starting earlier, you win before 65 but lose thereafter, i.e. you're just 'robbing Peter to pay Paul' and the total amount paid out is likely to be broadly similar either way.

I'd have to live to 88 to be worse off cant imagine living that long tbh 

They'll be basing their calculations on actuarial tables with averages for life expectancy, etc, so if you have reason to believe that you won't make it that far, based on your knowledge of your health, family history, etc, then yes, starting earlier at the lower rate is likely to be beneficial in terms of total paid out.

itsthelittlethings

Do you need it to go early? Personally id take a bit of a cut in the long run to comfortably go early.

Baldytyke88

Linuxgeek said:

Am I missing something here I'm 57 next month and plan to go at 60 

In the mix I have a small final salary that's forecast to pay around £4kpa at 65 

But found out if I take it next month they will pay me £3k pa so that's £24k before I get to 65 

Yes it's taxable but would just pay 3k it into my current DC pension for the next 3 years my current company will even put 6% on top

Inflation is now 4.1% - so I assume that the pension would increase by inflation every year.

GunJack

If, OP, you can take it and up your current contributions accordingly then it would appear to be a good move. 

DRS1

When you take a final salary pension there is usually a tax free lump sum (called a PCLS).  Sometimes that is calculated by commuting part of your pension.  You may want to look at that and see how that feeds into your sums.  Not everyone on here thinks you should take the lump sum but it does depend on the commutation factors.

Albermarle

Linuxgeek said:

eskbanker said:

By accepting a lower rate in return for starting earlier, you win before 65 but lose thereafter, i.e. you're just 'robbing Peter to pay Paul' and the total amount paid out is likely to be broadly similar either way.

I'd have to live to 88 to be worse off cant imagine living that long tbh 

Have you fully taken into account the annual increase the pension will get ( these vary from scheme to scheme but to have none would be unusual) .

Anyway in the UK a 57 year old man can expect on average to live to 84 , and a woman to 87.. That means 50% will live longer than that and around 25% reach their 90's.
If you are in good health with not too many bad habits, educated and financially secure, it is more likely you will be one of the ones to live longer.