Pension Supplement % Reduction for early retirement?

[NorthernBoy]

Does anyone know what the exact % reduction factor is for the pension supplement should you take your pension early?

I am aware that it’s 5% for each year for the NRA 60 and 65 pensions, but am unsure if this % applies to the supplement.

I have searched the forum and cannot find a definitive answer. If any recent early retirees can work out what the % supplement reduction is, as compared to their last pension statement is then may provide the answer

Knowing what the exact pension reduction (per year) is for the supplement would be really helpful in retirement planning.

Many thanks

[heapsy]

[quote][/quote] My guess is that it would be yes. Can't see it being any other way, if it was then it would break Inland Revenue rules.

[Jefferson Starfish]

My guess is that it would be yes. Can't see it being any other way, if it was then it would break Inland Revenue rules.

What's it got to do with the inland revenue?

[BeamishStout]

Does anyone know what the exact % reduction factor is for the pension supplement should you take your pension early?

I am aware that it’s 5% for each year for the NRA 60 and 65 pensions, but am unsure if this % applies to the supplement.

I have searched the forum and cannot find a definitive answer. If any recent early retirees can work out what the % supplement reduction is, as compared to their last pension statement is then may provide the answer

Knowing what the exact pension reduction (per year) is for the supplement would be really helpful in retirement planning.

Many thanks

if my recent experience is anything to go by then the supplement reduction for taking any part of pension early (in my case NRA65 was taken at the same time as NRA60) worked out to be more than 5% for each year taken early. The calculation that pensions apply must be more complicated than a straight % p.a. for each year taken early (and def works out to be a little more than 5% p.a) but I doubt if you will get a definitive answer either from the forum or from pensions.

https://www.royalmailchat.co.uk/communi ... 27&t=79099

[NorthernBoy]

Does anyone know what the exact % reduction factor is for the pension supplement should you take your pension early?

I am aware that it’s 5% for each year for the NRA 60 and 65 pensions, but am unsure if this % applies to the supplement.

I have searched the forum and cannot find a definitive answer. If any recent early retirees can work out what the % supplement reduction is, as compared to their last pension statement is then may provide the answer

Knowing what the exact pension reduction (per year) is for the supplement would be really helpful in retirement planning.

Many thanks

if my recent experience is anything to go by then the supplement reduction for taking any part of pension early (in my case NRA65 was taken at the same time as NRA60) worked out to be more than 5% for each year taken early. The calculation that pensions apply must be more complicated than a straight % p.a. for each year taken early (and def works out to be a little more than 5% p.a) but I doubt if you will get a definitive answer either from the forum or from pensions.

https://www.royalmailchat.co.uk/communi ... 27&t=79099

Thanks for the info. Yeah the calculation for reduction could well be more complicated to work out. However they should still update the pension website to show exactly what the reduction is for members so that it is transparent and allows people to plan accordingly.

[heapsy]

My guess is that it would be yes. Can't see it being any other way, if it was then it would break Inland Revenue rules.

What's it got to do with the inland revenue?

THEY set the rules on the reductions for early payment of your pension, the 25% lump sum rule etc. The employer doesn't have a say in it.

[RobertT]

THEY set the rules on the reductions for early payment of your pension, the 25% lump sum rule etc. The employer doesn't have a say in it.

Sorry heapsy, but that is wrong!

The early payment reduction factor is set out in the rules of the individual pension scheme. I follow the pensions forum on Money Saving Expert and some schemes have a factor as low as 2% or as high as 8% per year.
Some schemes even allow you to take your pension before NRA without reductions, if you meet certain criteria.
RM's reduction happens to be 5% per year!

The government of the day decides how much we can take in tax free cash and at what age we can access our pensions, etc.

The Inland Revenue essentially just collect the taxes as decided by that government.

[heapsy]

THEY set the rules on the reductions for early payment of your pension, the 25% lump sum rule etc. The employer doesn't have a say in it.

Sorry heapsy, but that is wrong!

The early payment reduction factor is set out in the rules of the individual pension scheme. I follow the pensions forum on Money Saving Expert and some schemes have a factor as low as 2% or as high as 8% per year.
Some schemes even allow you to take your pension before NRA without reductions, if you meet certain criteria.
RM's reduction happens to be 5% per year!

The government of the day decides how much we can take in tax free cash and at what age we can access our pensions, etc.

The Inland Revenue essentially just collect the taxes as decided by that government.

Ah, ok, sorry, I stand corrected. I have had people at work complain about it being RM who reduce your pension for early payment, thinking it was just THEM. I had to explain to one bloke that ALL pensions are reduced for early payment, regardless of type, or who the provider was. He was completely baffled. Although he didn't say so, I know from just knowing HIM, that he thinks a pension is like a set pot of cash. He couldn't understand the reduction for early payment thing at all.

[RobertT]

DB pensions such as RM's final salary and average salary schemes, generally do have early payment reductions. But there are exceptions, such as the '85 year rule' which applies to the Local Government Pension Scheme. Details here.

DC pensions are obviously just a pot of money and are worth whatever they're worth and they won't be reduced because they haven't usually got an NRA. Although some might have a guaranteed annuity rate or are invested in 'with profits', in which case taking them before 'scheme age' will mean you'll lose the benefits of the GAR or have to pay high exit charges.
If buying an annuity, then obviously the younger you do that after the minimum age of 55, then the less income it will provide.

[Jefferson Starfish]

.

[fly-catchers]

I remember when they had the calculator on the RMPP Pension website that adjusting the years to see what your pension would be took about 40% off the supplement. But when I contacted the Pension Centre they told me it was 5% per year. So the calculator seemed more correct! Had it been 5% per year you would have actually got more money taking the NRA65 early for the supplement than just getting the full amount for the one year. So not too surprised they reduce it quite a bit more..

[Hawkey99]

Did we ever get a definitive answer on the % reduction on the supplement.