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When to take ARP?

Discussion in 'Retirement' started by brook123lyn, Apr 12, 2019.

  1. brook123lyn

    brook123lyn New commenter


    I wonder if I can ask for some general advice from the lovely people who populate this board please?

    My husband and I have been teaching for 34 odd years each - ( me mostly part time – he full time) and we are planning to retire together next Summer, 2020 . He will be 58 and me much younger at late 57 :) We were planning to live on my pension and lump sum ( and some extra work if needed) until he turns 59 and 11months when he plans to take his ARP ( conscious of him wanting to earn after 60 ).

    We find the CPI and mathematical manipulations extremely challenging to work out – despite the generous contributors and explainers on these subjects from these boards- so just wanted to ask – if we can live on my pension for the extra 21 months , is it worth gaining the extra ARP percentage to get him to 59 +11 ( 99.8 % compared to 92.2% ), or when balanced against his falling final salary figures, should we take it all when we leave teaching and run?

    There has been no change in his position for many years so this aspect does not affect his last 10 years salary. We are just inside the tapered members scheme so can’t see that we will be affected by the Career average scheme.

    I have emailed a Union Pension advisor but am still waiting for a reply so am just putting it out there for any of your thoughts please. We would approach a specialised advisor if you think this is too complicated as well, so please any kind advice would be welcome.

    Warm regards and Happy Easter !
    alison_wain12 and Prim like this.
  2. Dorsetdreams

    Dorsetdreams Occasional commenter


    There is no need to worry about falling final salary figures. Once your husband stops working his final 10 years become fixed in time. His 'final salary' calculation will produce a figure (based on his salary 7 to 10 years ago, assuming like most of us he has suffered sub-inflation pay rises over the last decade) and this figure will continue to be adjusted for inflation until he takes the pension.

    Your plan seems very sensible, and if you do find you want more income in a year or so your husband could access his pension a little earlier. Overall, you will not be less well off by doing so until you are in your 70's

    I hope this helps - but please do seek other opinions.
  3. diddydave

    diddydave Established commenter

    I wouldn't worry too much about the CPI with regard to the final figure and just work it out in today's money as both the pension you take at 58 and at 59+11/12 will be increased by it.
    I'd look carefully at whether he's going to work from 58 to 59+11 as that may affect the 10 year calculation though.
    So the figures are:
    34/80 * 0.998 * salary compared to
    34/80 * 0.922 * salary
    (on a £50,000 salary that would equate to £21,207.50 compared to £19,592.50, a difference of £1,615 per year. But you will have been paid it for the extra 23 months. Take off 3 months payments as you'd get that much extra in the lump sum (3 x the salary) and you have 20 extra months, or 1.67 years. 1.67 x £19,592.50 = £32,719. So taking it at 58 you have £32,719 in the bank before you would start drawing the higher pension amount. Dividing this by the extra you would get by waiting comes out at about 20 years.
  4. diddydave

    diddydave Established commenter

    Slightly longer than that as the £1615 would all be taxed at 20% whereas £12,000 of each year's pension would be tax-free.
    £19,592 would be equivalent to £18073 after tax. 20 months = £30,183
    £1615 would be £1292 after tax

    £30,183 / £1292 = 23.4 years
  5. Sundaytrekker

    Sundaytrekker Star commenter

    I’d say take the pension when you leave your post. As they are saying above you won’t lose out for decades. Also, if you then decide to take any temporary post that will be entirely possible without further complications.
  6. brook123lyn

    brook123lyn New commenter

    I'd like to thank you all for your generous replies- particularly your numbers breakdown diddydave- this has been more helpful than you can know in finally making our minds up. And, I think you are absolutely right Sundaytrekker -there will be a certain freedon in progressing on and appreciate Dorsetdreams view about not to worry too much.

    Thank you all - I admire how you all support others on here. Warm regards
    Prim and Sundaytrekker like this.

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