Has the crisis changed your retirement date?

[NorthernBoy]

Given the current health and financial crisis I was wondering if people are having to change their retirement date?

I am 49, ex RM and am currently off work on furlough on 80% pay and don’t whether I will have a job to go back to. I was hoping to retire at 57, but this has been pushed back until at least 60, assuming I still have a job. My retirement plan was based on a RM pension, avc lump sum and drawdown from a small DC pension that I have been building up.

I am hoping that the state pension age does does increase from 67/68 but anything is possible in this environment.

Do people think that world markets will improve or are we in a downward spiral.

Stay safe all.

[RobertT]

Personally I'll be 52 this year and plan to at least semi-retire and leave RM in 3 years time. I have a personal pension to drawdown until 60 and hopefully beyond, to provide an income equal to the personal tax allowance each year, plus the tax free cash. Which considering I currently live on less than that, due to saving heavily for retirement, I should be OK money wise. It's effectively a pay rise!

At 60 I plan to take my NRA60 along with some of my AVC's, which should give me a higher income than at 55, then my NRA65 at 65 plus the remainder of the AVC's and DBCBS.

I should also have a small amount of CDC pension, which I will either take at 67 as income, or possibly transfer to the personal pension, depending on how much it's worth - and the 'DB Lump Sum'.

I also have ISA's to dip into if I need to. Plus I'm mortgage free.

All my equity based investments have gone down in value to some degree, but the personal pension has reduced the least because that's the one I'm going to dip into first, as I've 'life styled' the investments over the last few years.

I've already seen my state pension age increase from 65 to 66.2 and now 67, so hopefully it won't increase any further. I'm currently 3 qualifying years short of what's needed to get the current £175 per week. But who knows how we'll be paying for the covid-19 bailout and for how long?

It's always a worrying time when markets fall, and we obviously don't know how long they'll take to recover, but I'm still confident my longer term plans will come to fruition. In the meantime i'm continuing to save.

[stephen500]

No my retirement date has not changed. It is Dec 1st 2020. But this crisis may change it for me, if Capita and RMPP can't get my pension to me on time.
I had planned to apply on June 1st for November and have heard loads of stories about our pensions not being paid to time. In fact I actually know a PHG I worked with who was 65 in Feb and has still not received his NRA65 pension yet, with only receiving the paperwork on the day of his actual birthday. What also held him up was AVCs, they aid about month to the process as they have to be disinvested. So I will try and apply on May 1st for October (59 years and 9 months). I note that the RMPP have just published a notice on their website, stating that covid 19 is having an impact on staffing levels and some staff are having to work from home. Pay roll for pensions is run automatically, so that should be fine and they are attempting to process pensions to actual retirement ie 60 at 60 and 65 at 65 as their first priority and other tasks (like mine, asking before a due date, will fall further back). Capita were behind by 4 weeks from where they should be and that was before Capita. So yes I want to leave in December, but I could be at Royal Mail for a couple more months after that, if I don't manage to get paid to my time scale!

[wacko74]

Another question from a dummy here as far as our pensions are concerned...

People are saying they may have to defer their retirement due to the poor performance of the pension as a result of the downturn in the stockmarkets, so just how does our pension work?...

If Jim retires in 2020 at 65 and the market is down so his pension is worth £100 per week, does that pension income of £100 remain the same regardless of what the markets do in the future?

So if Jane was to retire 2 years later in 2022 (having made exactly the same contributions as Jim) if the market has boomed in those last 2 years and Jane's pension is worth £150 a week would Jim still be stuck on his £100 a week?

[RobertT]

Another question from a dummy here as far as our pensions are concerned...

People are saying they may have to defer their retirement due to the poor performance of the pension as a result of the downturn in the stockmarkets, so just how does our pension work?...

If Jim retires in 2020 at 65 and the market is down so his pension is worth £100 per week, does that pension income of £100 remain the same regardless of what the markets do in the future?

So if Jane was to retire 2 years later in 2022 (having made exactly the same contributions as Jim) if the market has boomed in those last 2 years and Jane's pension is worth £150 a week would Jim still be stuck on his £100 a week?

Depends what pension/investments you have!

The old defined benefit(NRA60&NRA65) RM pension scheme pays out an income based on wages earned and length of service. Any shortfall in the overall pot should be funded by RM.

But many people have AVC's, personal pensions and equity ISA's, etc aswell to help fund their retirement and many of those will be invested in stock markets, which have seen big falls recently.

Anyone who pays into the RM Defined Contribution Plan will also be affected.

[wacko74]

Thanks for the speedy reply (as ever Robert) I was referring specifically to just RM pensions (in particular the RM Defined Contribution Plan, which is I'm guessing the new one still awaiting approval?)

So you're saying that essentially with this new one, the state the markets are in at the time you start drawing it will define the amount you get, so all a bit of a gamble with winners and losers depending on whether the markets are doing well or not at the particular time you choose to retire.

[RobertT]

Anyone who joined RM since 1st April 2008 will likely be in the RMDCP!

With the RMDCP and any other similar scheme, you have a pot of money with which you have a number of options. One of which is to buy an annuity that provides an income for life. The amount you get will depend on how much is in the pot, your age, the type of annuity you want and annuity rates at the time. So to some degree there will be winners and losers, but the idea is that a pension is a long term thing and your money grows over the years, but as you approach retirement, you transfer your money into safer funds to protect your gains.

But there are other choices with a DC scheme, you don't have to buy an annuity, as this link will tell you: https://www.moneyadviceservice.org.uk/e ... on-schemes" onclick="window.open(this.href);return false;

The forthcoming CDC scheme aims to provide similar benefits to a defined benefit pension(income & lump sum) based on wages and length of service, but there are no guarantees. For example:

Each year for 10 years, 100,000 posties build up £300 worth of pension and are expected to live on average for 20 years after NRA(67), so there needs to be £6 Billion in the pot.

If there's more then our pensions will increase, if there's less they'll go down. And those changes will happen on a yearly basis depending on how much is in the overall pot. In practice we will all have our own individual slice of the CDC cake based on our pensionable pay and length of CDC service.

But as far as the increases/decreases are concerned, everyone will be treated the same, whether they're employed, deferred or retired members.

[Woody Guthrie]

But as far as the increases/decreases are concerned, everyone will be treated the same, whether they're employed, deferred or retired members.

That might be the case but it doesn't mean that the CDC pension will be intergenerationally fair or even sustainable in the long term.

Like all pension funds It assumes long term growth in the fund and a stabilisation or at least an accurate assessment of life expectancy growth.

Unlike other pensions though it only has two tools available to resolve failure on either point.

Those tools are reducing pension payouts or increasing active member contributions, if this becomes a structural problem in the fund both will adversely affect younger members far more than retired members. What that could actually mean in the longer term is younger members refusing to subsidise older members and leaving a scheme that has increasingly poorer outcomes for them. This will obviously only increase the problem.

[RobertT]

I can't disagree!

[Woody Guthrie]

On a related point to the title of the thread what tends to happen in situations like these (not that we've really had such a large scale crisis like this before) is that people start to feel very mortal, liquidate their assets, bring forward their retirement if they can afford to and ultimately stop thinking so much about the rainy day and more about now.

It's a generalisation but it does make sense but since my plan has always been to stop working at the earliest financially possible time I haven't really changed that, most of my money is in a relatively safe place now so the impact might be felt more after I retire with rising costs and reducing services.

That's my biggest fear, not my personal finances but the state of the world I'm going to retire in to.

[RobertT]

For me, it's not a case of retiring as soon as possible, nor is it a case of accruing as much money as possible, it's about doing the right thing at the right time for you and your family. Doing it at the wrong time means making too many compromises!

I want to be able to retire early enough to enjoy a good few post employment years before I get too old, while at the same time being financially able to not only achieve that, but also to have that rainy day money set aside for life's little emergencies and potential downturns in the economy, etc.

That's one of the reasons I always try to discourage people on these forums from taking their pensions early while still working, as it'll mean less income when they're likely to really need it.

I wish everyone luck in their retirement plans and I hope not too many of you have had to change your plans too much because of the current situation.

[Woody Guthrie]

It sounds difficult but you really need to be pragmatic and tailor your decisions around your own circumstances when it comes to your retirement options. Health, quality of life and personal relationships have to be considered alongside financial circumstances.

You could be talking to an overweight, diabetic smoker and without sounding too callous the chances of that person recovering their full pension entitlement if they wait until 65 are slim to none.

That's why I don't try to discourage or encourage staff either way.

[RobertT]

My experiences of this forum tells me that for everyone that says no, they'll be someone coming along that says yes. Regardless of the subject matter.

If there's one thing I always say about pensions, is that everyone is different and what applies to one person doesn't apply to another.

Ultimately everyone on here is an adult(although I do wonder about a few) where people post their opinions and where all of us are capable of making an informed decision.

[stephen500]

markets.jpg

Another question from a dummy here as far as our pensions are concerned...

People are saying they may have to defer their retirement due to the poor performance of the pension as a result of the downturn in the stockmarkets, so just how does our pension work?...

If Jim retires in 2020 at 65 and the market is down so his pension is worth £100 per week, does that pension income of £100 remain the same regardless of what the markets do in the future?

So if Jane was to retire 2 years later in 2022 (having made exactly the same contributions as Jim) if the market has boomed in those last 2 years and Jane's pension is worth £150 a week would Jim still be stuck on his £100 a week?

I am not in one, but I spotted this for the Royal Mail defined contribution plan, which offers hope for both those about to retire and young people. Suggesting those that are nearing their retirement, have their funds moved to a more safer haven and for the young, they have to take a longer term view.

[RobertT]

Lifestyling is a very common thing in the world of DC pensions, and anyone in the RMDCP or paying AVC's via Bonusplan or Flexiplan, will have the option to go that route with their investments.