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Deferred member

Discussion in 'Retirement' started by snowstorm, Apr 19, 2012.

  1. snowstorm

    snowstorm New commenter

    I've been a deferred member of the TPS since 2010. I'll be 55 next year and thinking about taking ARP.
    Can someone please tell me how the reduction is calculated and what it really means in terms of accessing one's pension at 55 rather than 60?
    If I take my pension at 55, would I get the lump sum and annual pension as predicted on my current statement or would that be reduced?
    I don't intend to teach ever again so won't be paying into my pension ever again; therefore, is it worth waiting until 60 to get my pension?
    Many thanks.
    SSx
     
  2. snowstorm

    snowstorm New commenter

    I've been a deferred member of the TPS since 2010. I'll be 55 next year and thinking about taking ARP.
    Can someone please tell me how the reduction is calculated and what it really means in terms of accessing one's pension at 55 rather than 60?
    If I take my pension at 55, would I get the lump sum and annual pension as predicted on my current statement or would that be reduced?
    I don't intend to teach ever again so won't be paying into my pension ever again; therefore, is it worth waiting until 60 to get my pension?
    Many thanks.
    SSx
     
  3. welshskyline

    welshskyline New commenter

  4. Dunteachin

    Dunteachin Star commenter

    I took it at 55 and haven't regretted it. I also do supply to top it up.
    Do the sums. Think about how much you will get in your hand every month between now and 60. I view it as cash in advance, rather than having to wait another 5 years for the full amount. The money I get offsets much off the loss from taking it early.
    You don't know how long you will live to enjoy it, so my philosophy is grab it while you can, especially if you are not going to pay any more into it.
    I've decided to cash in my AVC now, too. I didn't realise it died with you, so I'm grabbing that asap. It has held its value, much to my surprise. In fact, I have made a profit, although probably could have done better in a high interest rate account over the years. They don't tell you that at the time, but I'm not sure it falls into the category of mis-selling.
     
  5. welshskyline

    welshskyline New commenter

    Dunteachin - you would have had to have a VERY high rate of interest to compensate for the tax relief that is attached to an AVC scfheme.
     
  6. Dunteachin

    Dunteachin Star commenter

    Ah, hadn't thought about that. In that case, I'm pleased with the return. I put in a total of about £7,000 over the years and the annuity is about £17,000 now. I can take 25% cash lump sum and I'll be given a small amount each month for as long as I live.
    Will have to live into my eighties to get it all, though!!! [​IMG]
     
  7. snowstorm

    snowstorm New commenter

    Thanks welshskyline; it does.
    Is it worth waiting till Im 60 though if Im not paying into my pension?
    SSx
     
  8. alfredrussell

    alfredrussell New commenter

    If you are 55 now, take the actuarily reduced pension.
    Your lump sum and monthly pension will be reduced from the figure you would get at 60 by about 20%
    BUT
    You will have (approx) 60 monthly payments of that reduced pension and it goes up by inflation while you are waiting for a bigger pension at 60 which will not increase. You will also have the lump sum which you can use or invest for that 5 years. It is a financial no brainer. Take the pension now.

     
  9. snowstorm

    snowstorm New commenter

    thanks alfredmarch
    Im 55 this time next year; how much before my birthday should I apply for ARP?
     




  10. A few months.
     
  11. I took ARP at 55 as, following redundancy the previous year, I had no other option to get some sort of income; and managing on £750 pm is difficult. I have found that supply work is just absolutely dead, which surprised me a bit, as I taught physics in London for over 30 years. In two years, I have not got enough work to offset the outlay on CRBs, etc. The first offer of work I have had this year was for exam invigilator work, which turned out not to be worth it due to the outlay on further CRB checks and 'compulsory' courses.
     
  12. welshskyline

    welshskyline New commenter

    The drecision whether or not to take a reduced pension is, fundamentally, linked to how long you think you might live. To take an example, if Dave retires at 60 his pension will be £10000 per year. If, however, he takes ARB he will get £8000 per annum straught away. Money up front, which is always useful and £40000 (gross) in his hand by the time het gets to 60.
    The "break-even" point is around the age of 80 since, if Dave had retired at 60 he would have earned £10000 per annum. The extra £2000 per year X 20 years = £40000 (the amount his pension earned him from the age of 55 - 60 if he took ARB).
    So, from this perspective, if you think you're going to live to 100 you could be losing a lot of potential income by taking ARB. However, if your parents both died in their late 50s, you're a heavy smoker, drink like a fish and live in Doncaster, it might be a good idea to take the money early.
     
  13. snowstorm

    snowstorm New commenter

    Not ignoring the previous post, but financially, is it worth taking ARP if one has enough funds (albeit a small amount) to live on until 60?
     
  14. "if Dave retires at 60 his pension will be £10000 per year. If, however,
    he takes ARB he will get £8000 per annum straught away. Money up front,
    which is always useful and £40000 (gross) in his hand by the time het
    gets to 60."
    How did you work out the lump sum being £40,000? If Dave retires at 55, he will get £7,500, and a lump sum of 3 times that, £22,500.If he retires at 60, he'll get £10,000 plus a £30,000 lump sum.
    Should you take ARB if you have savings? No, not if you don't need it. Each day that goes by from 55 to 60 gives you more pension and more lump sum. If you take it and then just stick it in the bank, you are losing out - unless you drop dead early!

     
  15. Fiduncan

    Fiduncan New commenter

    Would this still be the case if you don't work in teaching from 55 to 60? My concern is that if I do supply teaching in Scotland then my pension is going to be based on a much lower salary scale due to the horrendous slashing of salaries! I'm sitting with the forms unsure of what is best as don't want to miss the boat and find out that my pension at 60 will be based on 18k instead of 33k! Feel really thick as not sure what figure final salary actually is based on!!
     
  16. voodoo child

    voodoo child New commenter

    Teachers' pensions website is really helpful. It's either the last year or the best of 3 in the last 10 years. That is then uprated for inflation. I've just taken ARP two days before my 60th birthday. The salary my pension is based on is one higher than I've ever earnt since we haven't had increases that have kept pace with inflation. I took the ARP before 60 so that I can work part time teaching and draw my pension. If I hadn't then if I work and the money of salary and pension comes to more than my full time salary they deduct from your pension. So if you are thinking of working past 60 this is worth considering. You have to have one day gap between contracts so that your employment is not continuous. But you can re-start paying into a second pension as well. I'm jolly pleased to have taken my pension since my lump sum is now in my bank. I won't be surprised if they decide to tax lump sums in future.
     
  17. Fiduncan

    Fiduncan New commenter

    Thanks for that!
    I think I now have everything clear in my head......now where did I put the retirement form???
     
  18. Any more views, please? I'm thinking of taking ARB. While the income will be reduced, I am increasingly thinking that the govt. will do something nasty to lump sums and/or index linking before I get there. After all, I taught for many years believing the state pension age would be 60, now it will be 66 for me, so I've already 'lost' thousands of pounds by comparison with those not a great deal older.
     
  19. Made me laugh thanks
     
  20. Morninglover

    Morninglover Star commenter

    Well, some people are easily pleased...Care to share why?
     

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