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    • cdbhel
    • By cdbhel 10th May 18, 10:48 AM
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    cdbhel
    Redundant at 54 DB Pension
    • #1
    • 10th May 18, 10:48 AM
    Redundant at 54 DB Pension 10th May 18 at 10:48 AM
    Hoping someone can help here please. We are in a situation where my husband has a redundancy notice for end July. He will be 55 in December. He has paid into his DB pension since March 1989. He has been told that if he wishes to take his pension (with a 3% reduction per year) then he will not be entitled to his redundancy as he is leaving of his own accord. Even then the 3% reduction is at the discretion of the trustees. If he stays until his termination date to get his redundancy then he will be a deferred member of the scheme so is not entitled to take his money until he is 55 at the earliest and that it would then be at the market rate reduction (around 5% per year, we believe). Can this be right? Any help gratefully received. Thanks in advance.
Page 1
    • lisyloo
    • By lisyloo 10th May 18, 11:03 AM
    • 22,499 Posts
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    lisyloo
    • #2
    • 10th May 18, 11:03 AM
    • #2
    • 10th May 18, 11:03 AM
    When was your husband planning to retire if this redundancy had not come along?
    What are his job prospects where you live?
    Is he eager to retire?
    • cdbhel
    • By cdbhel 10th May 18, 11:17 AM
    • 17 Posts
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    cdbhel
    • #3
    • 10th May 18, 11:17 AM
    • #3
    • 10th May 18, 11:17 AM
    When was your husband planning to retire if this redundancy had not come along?
    What are his job prospects where you live?
    Is he eager to retire?
    Originally posted by lisyloo
    He is in a niche industry so unlikely to get anything similar or paying anywhere near as much. I guess 60 would have been our aim.
    • GSP
    • By GSP 10th May 18, 12:21 PM
    • 191 Posts
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    GSP
    • #4
    • 10th May 18, 12:21 PM
    • #4
    • 10th May 18, 12:21 PM
    To be armed with another option.
    He may consider transferring out. If you can try to obtain a CETV figure. Depending on size may influence a decision or three. He would be able to start drawing down on his 55th birthday without any penalty fees. With this territory however comes the risk but if managed correctly may be just the start to retirement you need. Another advantage is a DB pension usually ends when you both go, but drawdown can be passed to family, if any left!
    • Anonymous101
    • By Anonymous101 10th May 18, 12:31 PM
    • 1,148 Posts
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    Anonymous101
    • #5
    • 10th May 18, 12:31 PM
    • #5
    • 10th May 18, 12:31 PM
    What is your position regarding savings and ongoing liabilities?

    Is it possible you may be able to bridge the time gap until he is able to start to draw down upon his pension? Would a lower salary be sufficient to tide you over?
    • lisyloo
    • By lisyloo 10th May 18, 12:51 PM
    • 22,499 Posts
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    lisyloo
    • #6
    • 10th May 18, 12:51 PM
    • #6
    • 10th May 18, 12:51 PM
    He is in a niche industry so unlikely to get anything similar or paying anywhere near as much.
    Originally posted by cdbhel
    This doesn't mean he couldn't carry on working.
    However your comment seems negative so maybe he/you doesn't want to ???

    I guess 60 would have been our aim.
    This doesn't sound like very firm planning (please don't be offended as we're trying to help here).
    You need to do some proper planning.

    How much do you need to live on?
    How much do you want to live on?
    What amount will the pension provide?

    I am 49 and hope to retire at 55.
    I am recording my outgoings now so I will have a good idea what I need/want to live on in the future (appreciate the advance work can't help you now but perhaps it might be good advice to someone reading).
    You can't now do that in advance, but you should be able to work out what you spend on everything from statements.

    If there is a gap between what you want and what you have then he might need to consider carrying on working at a lower income.
    Perhaps an opportunity to do something he enjoys?

    I took a pay cut of 26% a couple of years ago, but I really enjoy my new job (and importantly I can afford it) so it was a good move for me.

    Could he consider part time work.
    Well-being and health-wise this can be a really good move for a transition into retirement.
    Last edited by lisyloo; 10-05-2018 at 12:54 PM.
    • xylophone
    • By xylophone 10th May 18, 12:54 PM
    • 26,492 Posts
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    xylophone
    • #7
    • 10th May 18, 12:54 PM
    • #7
    • 10th May 18, 12:54 PM
    Has your husband obtained a new state pension statement?

    https://www.gov.uk/check-state-pension

    Is he able to find a job in another area? This may well be at a lower salary but would the redundancy cushion the blow until he reaches Scheme Normal Retirement Age?

    Presumably (given that he earns a generous salary) the redundancy money would be well over 30,000?
    • cdbhel
    • By cdbhel 10th May 18, 1:16 PM
    • 17 Posts
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    cdbhel
    • #8
    • 10th May 18, 1:16 PM
    • #8
    • 10th May 18, 1:16 PM
    Thank you for all your answers and suggestions. To keep my original message brief I left out quite a lot as the crux of my question was really whether anyone knew whether this is in fact correct that he would not be entitled to his redundancy despite being redundant and, in effect, being forced to take his pension at this time rather than lose a market rate later? I have done all the numbers and also have a transfer value in case we go that route (if he loses his redundancy if he opts to take his pension then this looks more likely). He does not mind working and does not mind taking a pay cut. In many ways the change would be good. The upshot is that really it seems very unfair that someone loses redundancy despite being redundant and that is what I really want to check out. I was just hoping someone would have some knowledge of this. I have emailed the full pension scheme rules to the Pensions Advisory Service along with the latest information we have received from the company. Thanks again.
    • Paul_Herring
    • By Paul_Herring 10th May 18, 1:36 PM
    • 6,367 Posts
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    Paul_Herring
    • #9
    • 10th May 18, 1:36 PM
    • #9
    • 10th May 18, 1:36 PM
    We are in a situation where my husband has a redundancy notice for end July. He will be 55 in December. He has paid into his DB pension since March 1989. He has been told that if he wishes to take his pension (with a 3% reduction per year) then he will not be entitled to his redundancy as he is leaving of his own accord.
    If he wishes to take his pension, when? Now? July?

    Leaving of his own accord when? Now? July?

    Something doesn't sound right there - have you missed something out?
    Conjugating the verb 'to be":
    -o I am humble -o You are attention seeking -o She is Nadine Dorries
    • lisyloo
    • By lisyloo 10th May 18, 1:47 PM
    • 22,499 Posts
    • 11,106 Thanks
    lisyloo
    whether this is in fact correct that he would not be entitled to his redundancy despite being redundant
    If he chooses to resign/retire before the redundancy process then yes, he's not entitled to redundancy.

    in effect, being forced to take his pension at this time rather than lose a market rate later
    He isn't being forced to do anything. He has a choice.

    The upshot is that really it seems very unfair that someone loses redundancy despite being redundant
    That's not the case.
    He would only lose the redundancy if he chooses to retire/resign before the redundancy process.
    This is the same for anyone of any age who chooses to resign.

    What you need to work out is whether the benefit to taking the pension early is greater than the redundancy.
    Have you got all the figures? and have you done that calculation?
    • xylophone
    • By xylophone 10th May 18, 2:06 PM
    • 26,492 Posts
    • 15,733 Thanks
    xylophone
    What is Normal Retirement Age for the Scheme?

    Does the scheme have a "protected pension age" of under 55?


    Is it then the case that if he chose to leave employment before he became redundant (ie before July), he would (obviously) not receive a redundancy payment but would be able to draw his pension early with an actuarial reduction of 3% per year pre NRA?

    Accepting redundancy changes the position so that any PPA would be lost?

    The earliest age he could then access the pension would be age 55 and scheme rules then dictate an actuarial reduction of 5% per year pre NRA?
    • brewerdave
    • By brewerdave 10th May 18, 2:23 PM
    • 5,103 Posts
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    brewerdave
    Effectively he isn't losing his redundancy if he retires before the date on the redundancy notice because the pension is being enhanced (ie the 5% reduction per year as per scheme rules is being reduced to 3%) ??
    • kidmugsy
    • By kidmugsy 10th May 18, 6:55 PM
    • 11,598 Posts
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    kidmugsy
    Effectively he isn't losing his redundancy if he retires before the date on the redundancy notice because the pension is being enhanced (ie the 5% reduction per year as per scheme rules is being reduced to 3%) ??
    Originally posted by brewerdave
    That sounds right. Suppose his scheme's normal retirement age is 65. With the 5% option a full pension of 100 p.m. becomes 50 p.m. With the 3% option he gets 70 p.m. The latter is 40% bigger than the former. I dare say that the widow's pension might be 40% bigger too - well worth checking. So how big a capital sum of redundancy compensation is worth giving up for a 40% bigger pension? Depending on how good the index-linking is, how much would an extra 20 p.m. cost = 240 p.a.? Somewhere around 10k. A correction would be needed for tax treatment but those are the lines to think along.
    Last edited by kidmugsy; 10-05-2018 at 11:58 PM. Reason: typo
    Free the dunston one next time too.
    • coyrls
    • By coyrls 10th May 18, 8:25 PM
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    coyrls
    That sounds right. Suppose his scheme's normal retirement age is 65. With the 5% option a full pension of 100 p.m. becomes 50 p.m. With the 3% option he gets 70 p.m. The latter is 40% bigger than the former. I dare say that the widow's pension might be 40% bigger too - well worth checking. So how big a capital sum of redundancy compensation is worth giving up for a 40% bigger pension? Depending on how good the index-linking is, how much would an extra 20 p.m. cost = 240 p.a.? Somewhere around 10k. A correction would one needed for tax treatment but those are the lines to think along.
    Originally posted by kidmugsy
    The figure for a 5% reduction would be 95 and a 3% reduction 97.
    • AnotherJoe
    • By AnotherJoe 10th May 18, 8:58 PM
    • 10,611 Posts
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    AnotherJoe
    The figure for a 5% reduction would be 95 and a 3% reduction 97.
    Originally posted by coyrls
    Doh ! They aren't looking at 1 year early they are looking at 10.
    • Thrugelmir
    • By Thrugelmir 10th May 18, 9:01 PM
    • 59,815 Posts
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    Thrugelmir
    The figure for a 5% reduction would be 95 and a 3% reduction 97.
    Originally posted by coyrls
    The reduction %'s quoted are per annum. With ten years between 55 and 65. That's 50% and 30% respectively.
    Financial disasters happen when the last person who can remember what went wrong last time has left the building.
    • Dox
    • By Dox 10th May 18, 9:21 PM
    • 937 Posts
    • 719 Thanks
    Dox
    I have emailed the full pension scheme rules to the Pensions Advisory Service along with the latest information we have received from the company. Thanks again.
    Originally posted by cdbhel
    Suggest you wait for their reply - nobody here has seen the rules so all the speculation is based partly on guesswork.
    • kidmugsy
    • By kidmugsy 10th May 18, 10:32 PM
    • 11,598 Posts
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    kidmugsy
    The figure for a 5% reduction would be 95 and a 3% reduction 97.
    Originally posted by coyrls
    The reductions are reductions per annum.
    Free the dunston one next time too.
    • coyrls
    • By coyrls 10th May 18, 10:53 PM
    • 1,041 Posts
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    coyrls
    The reductions are reductions per annum.
    Originally posted by kidmugsy
    OK Got it.
    • enthusiasticsaver
    • By enthusiasticsaver 10th May 18, 11:41 PM
    • 7,073 Posts
    • 15,322 Thanks
    enthusiasticsaver
    He wont lose his redundancy if he waits until July and takes the pay off. Surely he can live off redundancy money until he decides to draw his pension after he reaches 55 5 months after redundancy? Yes, it will be reduced so if he has other options or the redundancy is large enough to delay drawing on the pension that is better.
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