New Govt plan to draw Lump sum at 55

[Glenno]

Hi all, just heard about this on the BBC, has anybody got any more info or links to this "new initiative" ? the info on the red button is a bit vague, cheers in advance

[RobertT]

Try this:
http://www.telegraph.co.uk/finance/pers ... count.html" onclick="window.open(this.href);return false;

[baldrick]

It doesn't apply to people in Government pension scheme, which we are now.

[RobertT]

It doesn't apply to people in Government pension scheme, which we are now.

But it will potentially apply to:

Those who have AVC's (Bonusplan & Flexiplan).
Members of the RM Defined Contribution Pension Scheme.
Defined contribution pensions from previous jobs or ones you may have set up yourself.

[Lounge Lizard]

The tory idea behind this is that we're responsible enough to look after our own money in which case there was never any need for pensions.

[heapsy]

The earliest age at which you can take your pension will be moving up in line with the pension age. Not sure where I read this so I'm unable to post a link, sorry. Not a wise thing, if you ask me to consider taking it early anyway. It might sound great as you are getting it early, but it will be greatly reduced from what it would have been had it been left until the NRA. If you are still working why would you need to take it early? Another point I''d like to mention is this weird, got to get as much out of my pension before I die thing. Don't get it, if you're that sure you might die earlier than most then don't put your money into a pension in the first place.

[RobertT]

The age at which people will be able to take their pension is rising from 55 to 57 in 2028 and will then be 10 years less than an individual’s state pension age from then on – assuming no more changes.
More info here: http://www.telegraph.co.uk/finance/pers ... il-58.html" onclick="window.open(this.href);return false;

The general consensus among IFA’s etc is: If you don’t need it, don’t take it. So I would agree that taking a final salary/defined benefit pension early and taking anything up to a 50% hit is in most cases a mistake. There are always going to be exceptions particularly for people who have health problems and I do understand the ‘have less but for longer’ debate. But personally I think the whole point of a pension is to replace your wages when you pack up work, not to fund a few extra £'s in your pocket each week while still in employment.

[Glenno]

Cheers for the replies and links guys

[tinkerdil]

As it stands now, I qualify for state pension at aged 66. Does this now mean the earliest I could take my Royal Mail final salary pension is aged 56, not 55,given it is 10years prior to state pension? Or have I misunderstood?

[aposter]

As it stands now, I qualify for state pension at aged 66. Does this now mean the earliest I could take my Royal Mail final salary pension is aged 56, not 55,given it is 10years prior to state pension? Or have I misunderstood?

Depends if you reach 55 before 2028.

[RobertT]

As it stands now, I qualify for state pension at aged 66. Does this now mean the earliest I could take my Royal Mail final salary pension is aged 56, not 55,given it is 10years prior to state pension? Or have I misunderstood?

The increase from 55 to 57 isn’t being phased in. So if you reach 55 before April 2028 you can take your RM or any other pension you may have then if you want to. From April 2028 onwards, you will have to be at least 57 to take any of your pensions.
But bear in mind that the last few governments have fiddled with pensions quite a lot so don’t be surprised if more changes occur in the future.

[stodgy88]

i took my royal mail pension early and lost a percentage for this reason,but it gave me the option to go to working a three day week,and anybody in delivery will tell you thats worth it,s weight in gold.

[fishtank]

i took my royal mail pension early and lost a percentage for this reason,but it gave me the option to go to working a three day week,and anybody in delivery will tell you thats worth it,s weight in gold.

It's a difficult call unless you have an expiry date already but I would be careful of any advice that doesn't take into account the discrepancy between the expected lifespan of a manual worker and that of a middle class career pen pusher which is the group most quoted by the experts when they say life expectancy is increasing.

[RobertT]

i took my royal mail pension early and lost a percentage for this reason,but it gave me the option to go to working a three day week,and anybody in delivery will tell you thats worth it,s weight in gold.

It will always come down to individual circumstances, but the danger in making the choice you’ve made is that you will potentially end up working for longer than you would’ve otherwise done, albeit on a part time basis. And will also potentially have less to live on when you do actually retire completely.
So your approach may work well for you, and if you're happy that's great. But it won’t necessarily work for everyone.

[toomuchcoke]

The general consensus among IFA’s etc is: If you don’t need it, don’t take it. So I would agree that taking a final salary/defined benefit pension early and taking anything up to a 50% hit is in most cases a mistake. There are always going to be exceptions particularly for people who have health problems and I do understand the ‘have less but for longer’ debate. But personally I think the whole point of a pension is to replace your wages when you pack up work, not to fund a few extra £'s in your pocket each week while still in employment.

In theory (i.e. assuming die at the average age for someone of your age) then the total amount you extract from your pension pot should be the same no matter when you start taking it. You'll get less per week/month/year but get it for more weeks/months/years so it averages out. Prior to the upcoming relaxation of the rules on drawdown one could make an argument that getting the money out sooner and thus out of the "pensions straitjacket" would be a good thing. However it would rely on you then investing it sensibly and not blowing it on wine, women and song ...