Taking Pension at 50 years ago

[heapsy]

You mention, and I quote " i continued to pay into the pension plan after i took my pension " How did you manage to do that? Once you have taken your pension you cannot do this, unless it was a different scheme.

[RobertT]

You used to be able to continue building up your NRA65 if you'd taken your NRA60.
You can currently pay into the DBCBS if you've taken your NRA60.

If you take both NRA60 & NRA65 the only option is to pay into the RMDCP. Once you've paid into that for 5 years you can join the DBCBS instead.

[daveyeff]

You mention, and I quote " i continued to pay into the pension plan after i took my pension " How did you manage to do that? Once you have taken your pension you cannot do this, unless it was a different scheme.

.No, its the normal pension plan. it was the NRA 60 pension i took. the NRA 65 can still be payed in to. unless of course you take both NRA 60 AND NRA 65, in which case you cant.

[daveyeff]

Out of interest how much was the % reduction for taking at age 50?

Sorry don’t know the answer about the pension supplement.

Thanks

i took mine at 50, ...11 yrs ago. RMs predicted lump sum at the time was, if i left it till 60 was £34000. but i took it and was deducted 50% which gave me £17000 lump sum. in the 11yrs ive been receiving my pension ive had £33000 in pension payments. so in total ive had £50000 in payments since i took it 11 yrs ago. i used the lump sum to pay off my mortgage and saved a few thousand in interest payments on that as well. i continued to pay into the pension plan after i took my pension so i will have another pension of 16yrs to add to my existing one. some advise against it, some think its good for them. you aren't losing vast amounts as some seem to think. depending on your circumstances it can be a very good investment. it was for me. but you do what YOU think is right for you.

Do you mind me asking, how much pension are you getting per month now?

at first it was £250 per month(less tax) but its up to £265 per month now. at the time i had 17 yrs service in. the one im paying into now, my NRA 65 will pay about another £200 per month and has a current lump sum available of £13000, but that will rise by the time i reach 65.

[NorthernBoy]

at first it was £250 per month(less tax) but its up to £265 per month now. at the time i had 17 yrs service in. the one im paying into now, my NRA 65 will pay about another £200 per month and has a current lump sum available of £13000, but that will rise by the time i reach 65.


Is the £265 per month figure that you are getting now before or after tax?

If it’s before tax then that works out as less than 0.5% increase per year, can that be right.

[RobertT]

i took mine at 50, ...11 yrs ago. RMs predicted lump sum at the time was, if i left it till 60 was £34000. but i took it and was deducted 50% which gave me £17000 lump sum. in the 11yrs ive been receiving my pension ive had £33000 in pension payments. so in total ive had £50000 in payments since i took it 11 yrs ago. i used the lump sum to pay off my mortgage and saved a few thousand in interest payments on that as well. i continued to pay into the pension plan after i took my pension so i will have another pension of 16yrs to add to my existing one. some advise against it, some think its good for them. you aren't losing vast amounts as some seem to think. depending on your circumstances it can be a very good investment. it was for me. but you do what YOU think is right for you.

at first it was £250 per month(less tax) but its up to £265 per month now. at the time i had 17 yrs service in. the one im paying into now, my NRA 65 will pay about another £200 per month and has a current lump sum available of £13000, but that will rise by the time i reach 65.

So let's say you didn't take your NRA60 pension age 50 and left it until 60 instead.

Over that 10 years you'll have missed out on about £47,000(minus income tax) - £30k pension + £17k lump sum.

But had you waited until 60 your NRA60 pension, in simple terms, would be double what it is now at around £530 per month, plus you'll have received a lump sum of £34,000(in practice it would be more by waiting 10 years).

My maths would suggest that your break even age is 64 at best, and once you reach that age you'd have been better off by waiting until 60.

I have to say that's one of the lowest break even ages I've come across.

I don't doubt that paying off your mortgage will have saved you some interest and that's always a good thing to do. I've saved a good chunk by doing similar. Although rates have been at historically low levels for the last 10-12 years, so have you actually saved a particularly large amount?

The question is: have you gained more by paying off your mortgage than you're likely to lose by taking your pension early?
I would suggest you'll be seriously out of pocket over the course of your retirement, compared to taking your pension at NRA! But as long as your happy with your choice, that's all that matters at the end of the day.

As far as I'm concerned, the maths simply doesn't add up.

[daveyeff]

the lump sum has went down considerably since their estimate. my mate left his till he was 60 (same service as me) and got 26000. his pension pay is £480. he has since been medically retired as he has now got COPD. You seem to think i have had a bad return which is not the case. leaving it till maturity does not always have a silver lining and you are NOT greatly out of pocket.

[renrag40]

i took mine at 50, ...11 yrs ago. RMs predicted lump sum at the time was, if i left it till 60 was £34000. but i took it and was deducted 50% which gave me £17000 lump sum. in the 11yrs ive been receiving my pension ive had £33000 in pension payments. so in total ive had £50000 in payments since i took it 11 yrs ago. i used the lump sum to pay off my mortgage and saved a few thousand in interest payments on that as well. i continued to pay into the pension plan after i took my pension so i will have another pension of 16yrs to add to my existing one. some advise against it, some think its good for them. you aren't losing vast amounts as some seem to think. depending on your circumstances it can be a very good investment. it was for me. but you do what YOU think is right for you.

at first it was £250 per month(less tax) but its up to £265 per month now. at the time i had 17 yrs service in. the one im paying into now, my NRA 65 will pay about another £200 per month and has a current lump sum available of £13000, but that will rise by the time i reach 65.

So let's say you didn't take your NRA60 pension age 50 and left it until 60 instead.

Over that 10 years you'll have missed out on about £47,000(minus income tax) - £30k pension + £17k lump

But had you waited until 60 your NRA60 pension, in simple terms, would be double what it is now at around £530 per month, plus you'll have received a lump sum of £34,000(in practice it would be more by waiting 10 years).

My maths would suggest that your break even age is 64 at best, and once you reach that age you'd have been better off by waiting until 60.

I have to say that's one of the lowest break even ages I've come across.

I don't doubt that paying off your mortgage will have saved you some interest and that's always a good thing to do. I've saved a good chunk by doing similar. Although rates have been at historically levels for the last 10-12 years, so have you actually saved a particularly large amount?

The question is: have you gained more by paying off your mortgage than you're likely to lose by taking your pension early?
I would suggest you'll be seriously out of pocket over the course of your retirement, compared to taking your pension at NRA! But as long as your happy with your choice, that's all that matters at the end of the day.

As far as I'm concerned, the maths simply doesn't add up.

One of the lads in my office was approaching his 55th birthday a couple of years ago (he had joined RM in 2004) and went to see a financial adviser. The advice he received was that it was akin to financial suicide to take the nra65 at 55 because of the “hit” he would take on it..... not just immediately but the continual divergence in the value of the month pensions. The financial adviser told him not to take the nra60 early as well though the financial adviser thought that taking the nra60 early would not be as big a mistake.
He took the nra60 at 55 but left the nra65. I asked him recently did he have any regrets...... he said...... no. He was glad he took the nra60 early because of the extra money it gave him now and happy he had left the nra65 alone. He was also glad he had gone to see a financial adviser.

[RobertT]

the lump sum has went down considerably since their estimate. my mate left his till he was 60 (same service as me) and got 26000. his pension pay is £480. he has since been medically retired as he has now got COPD. You seem to think i have had a bad return which is not the case. leaving it till maturity does not always have a silver lining and you are NOT greatly out of pocket.

People often have different pension figures because of different pensionable allowances or because one spent some of their RM service as a part timer.
I was part time for the first few years and my pension is lower than if I'd been full time from the start, which is probably the most likely reason your mate's is lower?

I'm not old enough to access my pensions yet, but my NRA60 annual statement figures have gone up every year since we stopped building up those benefits in 2010!

I'm sorry to hear about your mate and I hope things work out ok for him. But the fact he took his pension at NRA will mean more money in his pocket now, when he actually needs it!

In your case and going by my maths, you're likely to be worse of by over £1,500 per year(before tax) from 64 and for the rest of your life. If you live to anywhere near average age, that's over £30k you're giving up.

Like I said in my previous post, if you're happy with that then fair enough, each to their own, etc. But from a financial point of view and assuming there's no urgent reason to take a pension early, personally I fail to see the logic. Especially if you're still working, as you'll be paying tax on it too!

[daveyeff]

your figures make it look a lot worse than it actually is. if i live til i am 85 i will have made £122000 from my pension payments. i only paid in £11500. thats 110,500 profit. whats bad about that? my mate will make more but he paid more in for longer so its obvious. plus i still have another one to get.

[RobertT]

the thing is though, i am not and have never lost a penny since i took it. people say you lose x amount of pounds if you take it early, this is absolutely not the case. the correct term of phrase should be ''you won't receive as much back'', which is obvious because you haven't paid as much in. people who leave it till maturity should get more simply because they have paid in more for longer, so its only right. i took mine because at the time i was paying a high mortgage repayment and it was the absolute bane of my life. so i paid it off and saved a few grand in interest and also had the pleasure of being better off each month by the amount of mortgage i was paying. in all, the amount i had paid into my pension by the time i had 17 yrs in was about 11 and a half thousand. since then i have received over £33000 in pension payments plus a £17000 lump sum so in total thats over 50 grand. this is from £11500. so its a profit of almost £40000. (more if i count the interest saved from my mortgage.) if i live till my mid 80s that will give a total of 122 grand. from £11,500. how can anyone say that is a poor amount? where have i lost money? my mate will have made more at £170 grand but paid in 10 grand more so he will have received £38 grand more. about 25 quid a week over the 30 yrs. i am not losing out. he has simply made more cos he has paid more. i also still have another pension to get at 65. i am happy.

I get that you're happy with you choice, and I have posted before on this forum about how much more pension we're likely to receive, compared to how much we pay in. Despite what some people think, the RM pension scheme is damn good value for money!

But the point I was making was that most people are better off, on average, by leaving their pension until NRA. Which you have demonstrated perfectly.

[daveyeff]

i know they are. its plain as day. but i am in no way out of pocket. i have made thousands from it.

[RobertT]

i know they are. its plain as day. but i am in no way out of pocket. i have made thousands from it.

So why do you come on this forum every now and again and extol the virtues of taking the RM pension early, when you now admit it's not the correct thing for most people to do?

I doubt very much if anyone will be out of pocket based on how much they're likely to have paid into the RM Pension. Personally I expect to get my money back within 3-4 years.

But that isn't really the point and you know that!

[daveyeff]

i know they are. its plain as day. but i am in no way out of pocket. i have made thousands from it.

So why do you come on this forum every now and again and extol the virtues of taking the RM pension early, saying things like 'you are NOT greatly out of pocket', when you now admit it's not the correct thing for most people to do?

i didn't say its not the correct thing to do. what i am saying is if you pay more in for longer you will receive more back. hence the reason you are better off. if you take it early then yes you will receive less, that is obvious. but it is in no way the wrong thing to do. i have already made more than 4 times what i paid in. how can that be bad.

[daveyeff]

in fact when i come to think of it. you are not out of pocket at all.