Taking pension early

[ted_e_bear]

Can anyone please help ?

I know this type of question has been asked previously and I've trawled through loads of posts looking for info but can someone please explain "like I'm a 5 year old"

I've got both the pension plan statements which we recently received so I presume I've got the figures I need, I've done 25 years service and I'll be 59 in July next year.

I'd like to know how to work out the figures for taking the pension at 59 and how to work out the option of a lump sum please.

[RobertT]

Your pension and any lump sum will be reduced by about 5% per year when taken before Normal Retirement Age. You don't say which section you're in, but it sounds like C?

Use page 12 of the RMPP 'members guide to benefits' for reference, but work out Age60 and Age65 separately.

For example:

If you have an Age60 pension of £8k that would give a pot value of £160k using the 20x multiple.
But if you're taking it a year early, that's reduced by 5% to £152k.
You can then take 25% of that as tax free cash(£38k) which in turn reduces the pension down to £5,700(£114k/20).

You can use a similar calculation to work out your Age65 figures, but they will be reduced by 30% if taken at 59. Plus you don't really have to give up any pension to provide a lump sum because you have the Cash Balance(DBCBS) for that.
I think the current reduction for the DBCBS when taken early is around 1.4% per year.

Any excess DBCBS once the tax free cash has been accounted for, is then paid out as a UFPLS, which basically means 25% of that excess is also tax free.

You might also find the calculator on the RMPP website and the illustrator on the RMSPS website, useful.
You can also apply for a quote to take your benefits early.

*All my figures are ballpark and for guidance only.

[ted_e_bear]

Your pension and any lump sum will be reduced by about 5% per year when taken before Normal Retirement Age. You don't say which section you're in, but it sounds like C?

Use page 12 of the RMPP 'members guide to benefits' for reference, but work out Age60 and Age65 separately.

For example:

If you have an Age60 pension of £8k that would give a pot value of £160k using the 20x multiple.
But if you're taking it a year early, that's reduced by 5% to £152k.
You can then take 25% of that as tax free cash(£38k) which in turn reduces the pension down to £5,700(£114k/20).

You can use a similar calculation to work out your Age65 figures, but they will be reduced by 30% if taken at 59. Plus you don't really have to give up any pension to provide a lump sum because you have the Cash Balance(DBCBS) for that.
I think the current reduction for the DBCBS when taken early is around 1.4% per year.

Any excess DBCBS once the tax free cash has been accounted for, is then paid out as a UFPLS, which basically means 25% of that excess is also tax free.

You might also find the calculator on the RMPP website and the illustrator on the RMSPS website, useful.
You can also apply for a quote to take your benefits early.

*All my figures are ballpark and for guidance only.

Thanks very much

[Wullie10]

Would it be easier like Robert says just to ask for a no obligation quote? I'm not sure how many quotes they'd allow if say someone kept asking every year and then didn't take it? Would defeat the point of sending out annual statements otherwise.

[ted_e_bear]

Would it be easier like Robert says just to ask for a no obligation quote? I'm not sure how many quotes they'd allow if say someone kept asking every year and then didn't take it? Would defeat the point of sending out annual statements otherwise.

Yes I tried that, I asked them the same question that Robert helpfully answered about how to work out the amounts using the figures they supply, however after going back and forth for about a week and three email conversations they still didn't give me that info, I was informed you have to contact them exactly 14 weeks prior to your birthday of choice to request the quote, that's why I asked on here.

[Sean06]

Would it be easier like Robert says just to ask for a no obligation quote? I'm not sure how many quotes they'd allow if say someone kept asking every year and then didn't take it? Would defeat the point of sending out annual statements otherwise.

Yes I tried that, I asked them the same question that Robert helpfully answered about how to work out the amounts using the figures they supply, however after going back and forth for about a week and three email conversations they still didn't give me that info, I was informed you have to contact them exactly 14 weeks prior to your birthday of choice to request the quote, that's why I asked on here.

Like me mate done it 14 weeks before my 55th f it just gona wait till my 60th an hope it runs more smoothly.