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Calculations that are beyond me Early Retirement calculations...

Discussion in 'Retirement' started by Rach05, Jan 29, 2020.

  1. Rach05

    Rach05 New commenter

    I will be very grateful for any help or suggestions to enable me to do some maths!
    I am going to take early retirement at age 56 and 3 mths when I retire on Aug 31 2020.
    My employer - independent sch- opted out of TP Aug 31 2019. So I will be a deferred member with frozen pension of a year when I retire.
    I am a tapered member (dec 2017) betw the 2 schemes
    My final salary service years come to 19 years and 58 days. My total service altogether is 20 yrs and 253 days.
    I am trying to use the calculators on TP website to guage as closely as possible what my likely pension and lump sum will be and then I can decide whether to increase the lump sum or not and reduce the pension a little. That in itself is a decision that I keep changing opinion on.
    However there is an early retirement calculator for final salary scheme but not one for the new scheme so my poor maths and lack of said calculator means that I can't work out my likely amounts...
    I contacted TP online chat which was unhelpful to say the least. I can't apply until March to start the process but am thinking about it alot!
    Does anyone understand my predicament and can offer any pearls of wisdom or hard calculated monetary facts!?
    Thankyou :)
  2. cpob

    cpob New commenter

    Rach05 likes this.
  3. 50sman

    50sman Lead commenter

    I could be wrong but I think you can draw your final salary now (reduced of course) but that small part which is career average you cannot draw until 67 - however other people may know better You need a definitive answer on this one form TP. If I am right you have two pension pots the larger one of which you can draw now and the smaller one you draw later

    Others would be interested to know the answer as well
    Rach05 likes this.
  4. Rach05

    Rach05 New commenter

    Thankyou for replying..
    I have to take both pensions when I take early retirement for some reason, I do know that is the case.
    I just can't work out how to get a clear view of the near exact amounts of cash I am dealing with or will be in September!! How can I decide something that I am too dopey to understand what the amounts will be that I am deciding on!!?! The TP chat person gave me this advice ( which I don't understand either).. I did CSE maths and got grade 1but I always new it wasn't really equiv to o level maths grade C!
    She said: apply 85.4% to all final salary figures on benefit statement and apply 65.3% to career ave section
    Thanks again for replying!!
  5. cpob

    cpob New commenter

    As you are retiring before 60 then yes, you have to take both pensions with a reduction. The option to take the final salary part and defer the career average part is only open to those retiring at 60.

    Your pension statement should tell you how much you have accrued in each pension. You need to apply the %ages that the TPS gave you to these figures and add them to get your total.
    Rach05 likes this.
  6. Rach05

    Rach05 New commenter

  7. Rach05

    Rach05 New commenter

    Thankyou for your reply, excuse any extra replies from me as phone keeps jumping...
    Soo I rang TP ( twice)and they were very helpful especially the guy I spoke to finally and he went through all calculations with me and I understood most of it!! I couldn't explain it to anyone but I think I can sit down and go through my options now with some actual realistic figures... I highly recommend calling TP rather than the online chat.
    I'm exhausted!!!
  8. Treacle3

    Treacle3 New commenter

    Yes, always best to ring them I found personally - what cpob says is exactly how I worked mine out for when I took early retirement (age 55) last August (and it was accurate). Hope that helps.
    Rach05 likes this.
  9. Rach05

    Rach05 New commenter

    Ah that's good to know , thankyou !!
  10. Rach05

    Rach05 New commenter

    Now I have to decide on lump sum size vs pension size...!!;)
  11. lindenlea

    lindenlea Star commenter

    @Rach05 The advantage of lump sum is that it becomes part of your estate when you die so if you haven't spent it all you can pass it on to the beneficiaries of your will. You can invest it and it might increase in value, or you can invest it in property eg home improvements that have quite a good chance of increasing in value and also give you the an improved quality of life. Or you can spend it on whatever you want or need eg helping family get on the housing ladder or exciting personal projects.
    The advantage of maximising your monthly pension is that this will be there every month for the rest of your life. Do you expect a long life - the longer your life the better the decision this becomes. If your monthly pension is quite small and you need to rely on that as your main income it may be an easy decision to go for the bigger monthly payment. If you have other income to support you - from a partner, from invested funds or from another job, maybe having a smaller monthly pension will not be a problem.

    We went for maximum lump sum, helped son2 buy a flat. It changed his life and has increased in value for him - a good decision for us as we are fortunate and had enough other income.
    Rach05 likes this.
  12. Rach05

    Rach05 New commenter

    Thankyou for sharing your experience.. I am moving more towards the max lump sum scenario but not totally!! As you rightly say it's tax free and I am thinking that it can be spent on buying a property that could make up the shortfall of a smaller pension in rental ( possibly!?).
    It is always very interesting to read what others have decided to opt for as it is a big decision to make. :)
  13. Treacle3

    Treacle3 New commenter

    Yes, very much a personal decision. I went for minimum lump sum because I wasn't clear about what I would be doing with the lump sum to maximise it's investment - and I just LOVE the feeling of getting that monthly income (about £150 more than if I'd gone for the maximum lump I think) for doing nothing. A sweet feeling after all those years at the chalkface :D
    It also helps put less pressure on my part time earnings being high enough now to supplement my smallish pension. The monthly pension should be increasing every year by 2-3% in line with Govt decision making - which is more than a lot of current investment opportunities I can achieve with my lump sum, of course. I guess I'm hoping I've gambled well and live to 80 or more!
    Rach05 likes this.
  14. Rach05

    Rach05 New commenter

    Yes I agree with all you say..and yet I also think how nice it would be to get the max cash payout in case i get run over by a bus sooner than later!! :)
  15. makras

    makras Occasional commenter

    I am contemplating the same scenario too. I want to get max cash now to use it to make a bit of a future for my children.

    So if am run over by a bus at least my dependants will benefit either way.

    Good luck.
    Rach05 likes this.
  16. Rach05

    Rach05 New commenter

    Thankyou, you too!

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