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Final Salary Calculations

Discussion in 'Retirement' started by TonyM19, Nov 18, 2018.

  1. TonyM19

    TonyM19 Occasional commenter

    Hi

    Just exploring some figures for an early retirement and wondering if anybody had any experience in calculating Final Salary? My best 3 years in the last 10 will fall off the end of the timescale in August 2019. I had a spell on SLT in that period and it has given my Final Salary a nice little boost. I want to see the impact of going one more year (to August 2020) but I would need to know the new Final Salary for that period (it includes 2 years of SLT rather than 3). It will be lower, but I want to know by how much. I have downloaded my Service Hstory from the TP website and it details how much I was paid and for how many days at that rate (I was paid at 5 different rates during the 3 year period). I can't get the figures in the period that my best 3 years are to come to the FInal Salary on my Benefit Statement. If I could get my head around the methodology, I'd be able to run some models to see if it's worth it or not. Anybody got any ideas? TP were just able to point me towards the raw figures, not calculate a new figure for me.
     
  2. jonnymarr

    jonnymarr Occasional commenter

    I can see why you would be concerned - you'd feel like a mug if you worked an extra year and then got less pension as a result.
    The revaluation of earnings to bring them up to current values is obviously the tricky bit, but if you have a look at previous threads on this very topic it should be possible at least to guestimate? Failing that, perhaps your union will have someone who could provide specific advice ( or contact someone like Wesleyan and put up with any kind of sales pitch they might give you as a result? )
    If the numbers don't stack up I suppose you've considered the possibility of working a bit longer but opting out of tps to 'freeze' the average salary calculation?
     
  3. Prim

    Prim Occasional commenter

    Just to confirm are you solely in the final salay scheme? Or do you have CARE as well?
     
  4. yodaami2

    yodaami2 Lead commenter

    I’m assuming you are older than 56 and a half and worked forever, so are in the final salary only. I don’t think you want to lose that 3rd year in your average. Opt out and let the pension accrue with the yearly index link raise. Even without doing the calcs, I think you would be working a year without any uplift. If you are on a mixture of the 2 already then there is no gain to be had from opting out.
     
  5. Dorsetdreams

    Dorsetdreams Occasional commenter

    Sadly that is not the case, due to the 'final salary link'. The OP could lose much more on the final salary pension than gained in a year on the average salary scheme.
     
    jonnymarr likes this.
  6. TonyM19

    TonyM19 Occasional commenter

    I am in the final salary scheme and I'm 58.

    What happens if I opt out of the pension scheme but continue working? I hadn't considered that as an option. I'm not ready to finish working just yet.
     
  7. jonnymarr

    jonnymarr Occasional commenter

    My understanding is that if you opt out of the scheme you automatically become a deferred member / calculation of average salary is 'frozen' and your benefits rise in line with CPI.
    In your situation I'd say it's definitely worth considering this ( even as soon as April 2019 if you read the other recent threads on Salary B calculation eg here and here ) ..... but please make sure you get proper advice first. Most of us, if not all of us on here have no specialist knowledge - just what we've picked up along the way - and it's too important a decision to leave to chance.
     
    Dorsetdreams likes this.
  8. yodaami2

    yodaami2 Lead commenter

    This! Especially the seek EXPERT advice.
     
    Dorsetdreams likes this.
  9. emerald52

    emerald52 Star commenter

    If you are over 55 and under 60 then ask your head to take pension ARB. End your current contract, have a day off contract and start new contract. Then start paying into new pension.
     
  10. steveroberts61

    steveroberts61 New commenter

    My best 3 in 10 average was dropping every month due to the CPI recalculation from 08 to 11. It was always higher than my final salary so I froze it in April and deferred it. I am retiring in January at age 57 and the difference in pension from freezing it or paying in till Jan was £20/year and I have saved myself over £2k in contributions from not paying in.
     
  11. Plasgwyn

    Plasgwyn New commenter

    I'm slightly confused about the CPI recalculation vs continuing to pay into my pension. The recalculation figure has continued to drop slightly each month since August, but my annual pension figure has risen by a higher amount than that drop. Can anyone explain why that is?
     
  12. Dorsetdreams

    Dorsetdreams Occasional commenter

    It is simply because you are gaining more years.

    Having been transferred to the career average scheme, I'm watching my 'final salary' falling and taking the final salary pension with it, but the growth in the new pension is compensating that. Just.
     
  13. TonyM19

    TonyM19 Occasional commenter

    Thanks for all the replies. Had some financial advice, made a few calls to TP (following some comments on here that pointed me in the right direction). Have a few options but don't want to discuss it on here until the deed is done. Don't want it to be too obvious who the poster is.
     
  14. TonyM19

    TonyM19 Occasional commenter

    Is that into the new career average salary pension?
     
  15. Brianthedog

    Brianthedog Occasional commenter

    I had an interesting phone call with TPS today. I wanted to know about my best 3 years in 10 as online it says it's from 1.11.08 to 31.10.11
    It's now dropping off so they are sending me the details of my last 10 years revalued salary so I can decide what to do. I also asked what reduction I'll have if I retire 6 months early. It's actually a 2.1% reduction which is a reduction of £1600 on my max lump sum and £240 a year on minimum pension. I'll obviously save my pension contributions of approx £1800, and around £500 interest on my mortgage that I'll be able to pay off earlier. But most importantly, I'll be able to start looking after my new grandson for one day a week six months earlier than planned, saving my daughter approx £1000 in nursery fees and giving me something money just can't buy!
     
    bevdex and Jamvic like this.
  16. Brianthedog

    Brianthedog Occasional commenter

    I checked my online pension account today and noticed that my adjusted salary had reduced by £50, but my annual pension increased by £18, and lump sum by £78
    I'm paying approx £250 a month in contributions, and worked out that at this rate over the next 4 months I'd pay £1k in contributions but it would take years and years to recoup the cost! Time to freeze now, bank the contributions and wait for retirement day in April.
     
  17. Dorsetdreams

    Dorsetdreams Occasional commenter

    @Brianthedog , it will be interesting to know what you glean from seeing your revalued years. Like you, I am perturbed by the monthly fall in my revalued final salary. I am not sure whether the months that are 'dropping off' now gained their last CPI adjustment of 3.9% (2008/9) or 5% (2009/10). If is is the former, we have lots more painful declines to come over the next 18 months. If it is the latter, things will stabilise or improve, because the next year to start dropping out is 0.0% (2010/11).
     
  18. Brianthedog

    Brianthedog Occasional commenter

    I'm afraid I just gave up trying to figure all that out in the end. Which is why I decided to freeze my pension now. I know it's not going to improve due to those CPI figures, and TP told me that it wasn't going to improve at all, so I just couldn't see any point in holding out. The only benefit would be the death in service benefit. But as I dont plan to die soon I can't let that influence me too much.
     

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