taking pension early

[stodgy88]

I know taking pension early will cost me 5% per year ,but is the reduction off the figure quoted on your annual pension statement or as that got nothing to do with it ,will ring helpline if no one can give me answer -cheers

[RobertT]

The figures on your statement are only really a guide as to how much you'll get. When you apply for retirement the pensions people will look at your record on an individual basis.

But your pension you will get is based on the first set of figures on your statement headed 'Your Pension'.
If you take your pension at 55 for example, expect 25% to be taken off this figure. Although as the years go by, taking it at 55 will slowly increase the percentage loss due to the CARE scheme being based on 65.

The other figures - 'If you retire at 60/65' are based on you staying in the job to those ages,current pay staying the same and no changes to the scheme in the future.

[stodgy88]

so under YOUR BENEFITS IF YOU RETIRE AT 60 on my 2007 illustration do i knock off 25%if i take it at 55 ? cheers

[RobertT]

No! You'll have done 5 years less service so the figures for retirement at 60 are immaterial.

As a very rough guide:

Final Salary pension at March 2009 + CSDB Pension at March 2009 + CSDB Pension at March multiplied by number of years to 55 minus 25% = Your Pension at 55.
So if you are currently aged 50 with about 20 years service it would look something like:
£5,000 + £250 + £1,250 - £1,625 = £4,875

All figures are aproximates and will depend on the individual.

[stodgy88]

ill be 52 1/2 in april with 25 years service,will a lumpsum still be paid -cheers

[RobertT]

The rules for taking your pension/lump sum are changing from April 6th 2010. From that date you will not be able to take it until you are 55,so if you still want your pension early you will have to take it before that date.

[stodgy88]

wrong --- in the pension pullout in courier ,the royalmail now say if you are between 50 and 55 on april 6th 2010 ,you can take pension early (with reduction ) and carry on working.

[RobertT]

I think you've just repeated what I said!

At the moment by law anyone who is 50 or over can take their pension or lump sum and either retire or carry on working. Or take a preserved/personal/stakeholder pension that they may also have.

From 6th April 2010(start of the next tax year) the law is changing and you will have to be 55 to touch your pension/s.

Anyone between 50 and 55 has until that date to take their pension if they want to,otherwise they will have to wait until they are 55 at the earliest.

[stodgy88]

your right i apologise

[RobertT]

No problem.

[stodgy88]

ROBERT T if possible could you give me a rough estimate of possible pension and lump sum --ive worked for royalmail 25 years and aged 52 and a half -thanks

[RobertT]

I think you have a lot more info on your position than I do. So the simplest way probably is:

Look at the 1st set of figures on your statement - under 'Your Pension'. This is how much you'd get if you were 60 and took the pension today - or rather on 31 March 2009.If you are 52.5 now it was presumably your 52nd birhday around that time,so we'll base it on 52 as its easier.

Take away 40% of Final Salary Pension at 31 March - that's 5% for each year your taking it early.
Take away 65% of CSDB Pension at 31 March -

Add the 2 answers together and you'll get roughly the pension you could get. I think you'll also get pension supplement but tbh I'm not sure how that's worked out,but I'm sure it'll be lower than the figure quoted on your statement.

Hope this helps.

[stodgy88]

thanks -willi get pension supplement if im still working?

[RobertT]

Thinking about it now I would say no you wouldn't get the supplement if you carried on working.

[stodgy88]

i,ll leave you in peace now-thanks again