Pensions: Options 1 and 2

exphg1961 · Post by **exphg1961** » 31 Oct 2016, 17:40

Hi Everyone
I am considering taking my pension at age 55 and recently received the available figures from Chesterfield.
I am though, somewhat confused by the relevant numbers shown in the letter.
Whilst my total pension plan figure for NRA 60 (incl Pension Supplement) is appx £9500 the "benefit options" are considerably different eg Option 1= £7000 (inc Pension Supp) with no lump sum, and Option 2 £5300 (inc PS) with a lump sum of appx £35500.
I'm obviously missing something here, hopefully one of you kind people will enlighten me.
Unfortunately I'm not in the UK at present and therefore unable to make a call to our colleagues at the Pensions Service Centre.

Post by **TrueBlueTerrier** » 31 Oct 2016, 18:10

Don't forget the figures are based on you taking your pension at 60, the reduction is because if you take it early you lose 5% per year - or in your case 25%.

Hopefully others will confirm this is what has caused the difference.

Post by **RobertT** » 31 Oct 2016, 18:14

You’re in section C so you get a choice of whether you take a lump sum or not, hence the two options. Although the figure quoted will be the maximum lump sum possible. You could take a smaller one if you wanted to which in turn would give you a higher pension.

The figures are reduced because you’re considering taking it 5 years early and so it will be reduced by 25%(5% per year).

A similar 5% per year reduction would also apply if you take your NRA65 pension early.

exphg1961 · Post by **exphg1961** » 31 Oct 2016, 18:53

Thanks TBT, and Rob for your replies.
Whilst i appreciate the differences in the respective annual pension figures (Opt 2 including a lump sum) it was the difference between the NRA 60 numbers and those quoted in Options 1 and 2 that i wasn't certain of.
To clarify what you say; these figures (Options 1 or 2) are what i can expect to get if i do decide to take my pension early, viz at 55?

Post by **RobertT** » 31 Oct 2016, 19:03

exphg1961 wrote:Thanks TBT, and Rob for your replies.
Whilst i appreciate the differences in the respective annual pension figures (Opt 2 including a lump sum) it was the difference between the NRA 60 numbers and those quoted in Options 1 and 2 that i wasn't certain of.
To clarify what you say; these figures (Options 1 or 2) are what i can expect to get if i do decide to take my pension early, viz at 55?

Yes.

exphg1961 · Post by **exphg1961** » 31 Oct 2016, 19:12

Unfortunately i had to leave on IHR grounds exactly a year ago,after 26 years service i did transfer a previous pension into the scheme, hence the figures.
Thank you so much for the assistance,all contributors to this website should be proud of themselves, you're a great bunch.