pension enhancement question?

[stroller]

Hi everybody.

I am in a real quandary, you expert opinions would be most helpful,

I have posted before which you might have seen, I have been offered VR again 104 weeks, I am 54 in August, I always wanted to go at 55 but the way things are going now the future looks bad, I have been offered £50k, but if I turn it down and carry on working until I get to 55 and get offered it again ( if it comes around again ) you would only get offered £14k compensation and an enhanced pension,

the question is how much would it be enhanced by waiting until 55? what would be the best option take VR now and call in my pension at 55? or carry on working get to 55 and hope VR comes around again and take it with an enhanced pension,

what kind of difference do you think enhanced or not enhanced, my service is 33 years in June,

[genesis]

Personally I am in the same boat as you ,I am 54 been offered 104 weeks and am taking it . I am not chancing anything when there is a mstf review imminent.

[stroller]

What service have you done?

[genesis]

What service have you done?

Over 25 years , which is all you need for 104 weeks. Obviously you would get a good enhanced pension with your service ,but YOUR NOT 55 . and if I was 55 when they offered , I would bite their hand off .But remember I have still got to take my pension as well anytime after 55.

[stroller]

Any idea how much it would be enhanced by?

[genesis]

One of the lads who just missed out. Did have a figure of around £70.000 including 26 weeks redundancy and I think about £130 a week. Hes 55 with 26 years in , but I think he bought extra years in his pension ,so you might be looking at the same or similar. However he just missed out, and will have to wait until the next round. I think its called a definition of agony.

[baldrick]

I worked out that for every year longer I worked, I would get about £300 pa more on my pension and £900 more on my lump sum.
But I got ex-phg allowance and London Weighting which were pensionable, so it would be a bit less for you.

[baldrick]

Any idea how much it would be enhanced by?

It is enhanced by 37.5% of remaining reckonable years to 65. I'm not sure if that means 37.5% of all years until 65. If it does that would be 3 years and 9 months added, if you take it at 55.
But I think it probably means 37.5% of years to 60 on the NRA60 part of your pension ie I year and 10.5 months added if you take it at 55, plus 37.5% (3 years and 9 months) on the NRA65 part of your pension.

[stroller]

baldrick,

In that case would I be better off taking the VR now 50k and calling my pension in at 55? Or waiting until 55 getting 6 months pay as compensation and an enhanced pension? Your opinion weighing things up would be most helpful.

[2old4this]

So if i'm offered VR at 58 will i be offered the 104 wks or do i have to take the 6 mths and inhanced pension.

[stroller]

If your in the pension scheme 26 weeks pay as compensation and enhanced pension, if you are out of the pension scheme you would get 104 weeks VR money, that's the deal at the moment but a review is very soon

[2old4this]

Don't really want to take my pension till i'm 60. But if it is still on offer i'll see just what the offer is.

[baldrick]

baldrick,

In that case would I be better off taking the VR now 50k and calling my pension in at 55? Or waiting until 55 getting 6 months pay as compensation and an enhanced pension? Your opinion weighing things up would be most helpful.

Well if you take the pension at 55 it will be actuarily reduced by 5% for every year you take it early.
So that would be a 25% on the NRA60 part of your pension (the main part) and a 50% reduction on the NRA65 part - I think that's how it works anyway. That is quite a big reduction, and it would mean a related reduction on your lump sum too. I don't know what your pension would be, but assuming it's £10k pa you are going to lose £2,500 pa and £7,500 on your lump sum. That's a loss of £57,500 over 20 years. Quite a lot I think.

If you take it with EVR at 55 it will be enhanced by about £500 pa (my best guess), and your lump sum would be increased by £1,500. So an increase of £11,500 over 20 years, or £69,000 (+26 weeks VR 0f about £12k)more than if you take it early at 55 without EVR. You would be losing £81k over 20 years to get a VR payment of around £50k now.

But of course you don't know if you will be offered EVR at 55, or whether the terms will still be the same. If you knew you were going to get it then I would wait. But I don't know what is best for you. It depends on your personal circumstances and how badly you want to leave. Not an easy decision.

[stroller]

baldrick,

a brilliamt reply as always, its a massive decision and if I had a crystal ball and could look into the future that would help, they want over 20 VR in our office which is unbelieveable amount, if there were 10 VR the decision would be easier knowing they would want more next year which would take me to 55, not sure if they get the over 20 people on VR how they could ever offer it again as the jobs would be to the bare minimum,

I have got a lot of thinking to do nearly 54 is not a good age to be in this job as I am so close, but as I said to a few people in the office yesterday I would hate to be in my 30's or 40's in this job now

[barrowc]

A lot is also going to depend on what you're planning to do when you leave RM - e.g. are you planning to find another job or are you planning to live off your pension?