taking pension early.

[davethepostie]

i am sure it has been asked on here before but can't find it in posts. i am 58 with 35 years service. is it worthwhile taking my pension now? the whole pension thing totally confuses me. i have heard that you lose 5per cent a year on benfits after 2010 i think but would this not be offset by not paying in to the fund. very confused and hope somebody could help me out on this. cheers.

[Eric]

In the long term, you, or your dependants, will be better off if you leave the money in until you retire. However, if you really need the lump sum (eg to pay off credit cards on which you are paying 20% plus in interest) or, have a surefire investment to spend it on, take it now.

[RobertT]

The general answer is, if you don't need the money, don't take it.

The pension you built up before April 2010 can be taken at 60 without any penalty, if take it before 60 you have to take about a 5% reduction per year.
The pension you build up after April 2010 can be taken at 65 without penalty, before 65 and a 5% per year reduction applies.

To plan your retirement properly any debts, mortgage, etc ideally should be paid off well beforehand.

[POSTMAN]

Rob,is that a typo error in the 2nd paragraph.

[RobertT]

Rob,is that a typo error in the 2nd paragraph.

I don't think so Postman, which bit are you on about?

[POSTMAN]

Rob,is that a typo error in the 2nd paragraph.

I don't think so Postman, which bit are you on about?

Arrrghhhh forget it,just realised what you meant.If i take my pre 2010 pension before 60 i get a 5% reduction per year. My bad,cheers.

[davethepostie]

still very confusing to me. quite a few people where i work are seriously condidering taking it early. there seems to be an opinion that the government will take over the pension scheme next year and may well tell us we can't take it at 60 but 65. any views on this?

[TrueBlueTerrier]

still very confusing to me. quite a few people where i work are seriously condidering taking it early. there seems to be an opinion that the government will take over the pension scheme next year and may well tell us we can't take it at 60 but 65. any views on this?

Unlikely the acts says on transfer of accrued rights says:

The Secretary of State may by order make provision for the transfer of qualifying accrued rights to a new public scheme (without the need for any approval or consent to the transfer).

http://www.publications.parliament.uk/p ... html#j2s_2" onclick="window.open(this.href);return false;

Taking the pension at at certain age is as far as I know part of the accured rights.

Its not impossible they'll change it but even with the local government pensions changes which are causing so much grief, they have not changed any of the Pensions rights already accured, just future ones when they change the pension. So if you have earned the right to take a RM pension at 60 with 5% loss per year then you still have that right---- at the moment.

[RobertT]

So if you have earned the right to take a RM pension at 60 with 5% loss per year then you still have that right---- at the moment.

The only reduction that will apply at 60 is from the career average 'pot' earned after April 2010, all pension earned before that date is paid in full, without reduction at 60.

[wileile1952]

had 30 years service in and took my pension early yes you lose a small amount but you make that up by the time you would have taken your penisin at 60. the best thing I ever did at royal mail, no longer have to work overtime. you get your lifr back

[RobertT]

had 30 years service in and took my pension early yes you lose a small amount but you make that up by the time you would have taken your penisin at 60.

That would only happen if inflation is higher than wage increases, which may well have been the case over the last few years, but will not necessarily happen in the future.

the best thing I ever did at royal mail, no longer have to work overtime. you get your lifr back

I know everyone's situation is different, but a pension is predominately to provide an income in retirement, not to make your working life a bit easier.

[heapsy]

Read carefully guys. A true story follows. My mother recently met a former work colleague of my dads, who is currently unemployed. He does NOT receive a penny from the state in benefits for one simple reason. He foolishly took the pension early, 55 I think. As a result the benefits people have blocked any money as he has an income. Be warned. It is true that they will let you spend your cash savings before paying you anything. (think there is a sum you can keep ) Think carefully, look at all the options before you go down this route, it may be a massive mistake in the long run.

[R@YAL F@IL]

Read carefully guys. A true story follows. My mother recently met a former work colleague of my dads, who is currently unemployed. He does NOT receive a penny from the state in benefits for one simple reason. He foolishly took the pension early, 55 I think. As a result the benefits people have blocked any money as he has an income. Be warned. It is true that they will let you spend your cash savings before paying you anything. (think there is a sum you can keep ) Think carefully, look at all the options before you go down this route, it may be a massive mistake in the long run.

Great advice thanks

[davethepostie]

not sure why every union rep you speak to tells you not to take pension early. have got my projected figure and even with the loss of 4 grand approx in lump sum by taking it 15 months early i still will be in credit for next 4 to 5 years because of monthy pension payment. who knows if i will be alive when i finally lose slightly. it seems too good to be true. keep looking for a downside to it but cannot find one.

[Brainache]

If you take the pension early, does the 5% per year reduction come from the lumpsum, pension, or both ? Also, does the actual value of your pension pot stay the same or get reduced as well (for AVC purposes)?