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Thread: Early retirement

  1. #351
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    Quote Originally Posted by Maris View Post
    Mine has gone up 189k in a year! From 25x pension to 36x. Hoping I don’t miss the boat.
    Whooooooo hooooooo I'll be giving mine a go at xmas.
    I've heard of CETV multiples being over 50 so it's a win win situation

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    Quote Originally Posted by RD200 View Post
    Whooooooo hooooooo I'll be giving mine a go at xmas.
    I've heard of CETV multiples being over 50 so it's a win win situation

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    Indeed. I got to 52x, age 55. Breached my LTA though!
    Last edited by Skyman; 7th September 2019 at 19:25.

  3. #353
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    Quote Originally Posted by Skyman View Post
    Indeed. I got to 52x, age 55. Breached my LTA though!
    Great stuff, well done, how did you feel when you read those figures ?

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  4. #354
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    Quote Originally Posted by RustyBin5 View Post
    If you are saying 30k for a couple you must include state pension - circa 2x £8k so that’s 16k before you start. Leaves a shortfall of only 14k which a fund of circa 470k has a sporting chance of achieving based on your 3%
    Pretty grim if you have to work until state pension age, however.

  5. #355
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    Quote Originally Posted by RD200 View Post
    Whooooooo hooooooo I'll be giving mine a go at xmas.
    I've heard of CETV multiples being over 50 so it's a win win situation

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    Christmas? I can get a quote online every day.

  6. #356
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    Quote Originally Posted by Maris View Post
    Christmas? I can get a quote online every day.
    Final Salary ?

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  7. #357
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    Quote Originally Posted by Maris View Post
    Christmas? I can get a quote online every day.
    The online figures tend to be estimated transfer values - the guaranteed transfer packs are the once a year ones and figures can vary

  8. #358
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    Quote Originally Posted by RustyBin5 View Post
    The online figures tend to be estimated transfer values - the guaranteed transfer packs are the once a year ones and figures can vary
    That's true. Yes it is final salary and I get a free quote once year and have to pay for additional quotes but the rate the quote is varying month by month it would be well worth it.

  9. #359
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    Quote Originally Posted by Maris View Post
    That's true. Yes it is final salary and I get a free quote once year and have to pay for additional quotes but the rate the quote is varying month by month it would be well worth it.
    Only worth it if you are contemplating transferring anyway. For many the tv is irrelevant as their top priority is a guaranteed escalating income so leaving it where it is will be best. For our clients this is the default stance until we evidence otherwise. In other words we assume before we talk to someone that staying in the DB scheme is best rather than searching for ways to make transferring look better.

  10. #360
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    Quote Originally Posted by RustyBin5 View Post
    Only worth it if you are contemplating transferring anyway. For many the tv is irrelevant as their top priority is a guaranteed escalating income so leaving it where it is will be best. For our clients this is the default stance until we evidence otherwise. In other words we assume before we talk to someone that staying in the DB scheme is best rather than searching for ways to make transferring look better.
    What would you say the average transfer value is that you see ?

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  11. #361
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    Im taking my pension out (when I retire! ) in July next year. (Im 60 in January)

    It is a final salary pension ....My pension will be very modest compared to some figures Ive seen on here! Though it will give me a good enough lifestyle, and will be in S.E. Asia for our cold winter months!

    Everybody is different, in how much money they want to retire on..for me..I will be fine....more importantly though, the remainder of my life, I wont be governed by work or the alarm clock! Will be able to eat healthily and at a regular time (I work for the railway..so work at stupid times!).

    I cant wait...Ive had lots of people ask me...what will you do etc..my reply is..whatever the hell I want to do!

    I , as I have said, work stupid shifts, only guaranteed days off are christmas day and boxing day..so i cant wait... BRING IT ON!

  12. #362
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    Quote Originally Posted by RD200 View Post
    Whooooooo hooooooo I'll be giving mine a go at xmas.
    I've heard of CETV multiples being over 50 so it's a win win situation

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    Excuse the question but are you transferring out of FS/DB scheme with a calculated lump to manage for the rest of your life?
    The figures x24, x36 are these yearly pension not including state pension at 65+?
    I have 35 years in University scheme & just looking at options, cheers.

  13. #363
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    Quote Originally Posted by valleywatch View Post
    Im taking my pension out (when I retire! ) in July next year. (Im 60 in January)

    It is a final salary pension ....My pension will be very modest compared to some figures Ive seen on here!

    I cant wait...Ive had lots of people ask me...what will you do etc..my reply is..whatever the hell I want to do!

    I , as I have said, work stupid shifts, only guaranteed days off are christmas day and boxing day..so i cant wait... BRING IT ON!
    I definitely won't miss working shifts.
    Apart from a brief period in the 90's when I worked a double day shift I'd escaped shifts till the last 4 1/2 years.
    I'm convinced shifts are unhealthy and nights are the worst.
    My final salaries are fairly modest too but they'll be enough

    Good luck

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  14. #364
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    Quote Originally Posted by RD200 View Post
    I definitely won't miss working shifts.
    Apart from a brief period in the 90's when I worked a double day shift I'd escaped shifts till the last 4 1/2 years.
    I'm convinced shifts are unhealthy and nights are the worst.
    My final salaries are fairly modest too but they'll be enough

    Good luck

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    Thanks for that!

    Nights are a killer! I have for the past few years, swapped my night shifts....(get extra money for doing them..so easy to swap them).

    I am taking up a pension level option type thing...which basically will give me an extra yearly pension (until I get my state pension.....if Im still around!) at 66...then it will drop a little at 66...........had a look at it..IF i live to about 74...thats when Id start to lose out (by taking the level pension option thingy) a little financially that is,...but...will I still be alive then? if I am? will I still be healthy enough to go to Thailand twice a year and do what Im doing now?!

    Will I need more money then...if I end up in a care home...the council get my house money pensions anyway!

    We only live once...this isnt a rehearsal...live life I say!

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    Quote Originally Posted by RustyBin5 View Post
    Only worth it if you are contemplating transferring anyway. For many the tv is irrelevant as their top priority is a guaranteed escalating income so leaving it where it is will be best. For our clients this is the default stance until we evidence otherwise. In other words we assume before we talk to someone that staying in the DB scheme is best rather than searching for ways to make transferring look better.
    This was certainly the approach adopted by our IFA and the independent pension advisor. Both our pensions will have transferred out by the end of the year. In no particular order, our drivers, which satisfied the increasingly strict scrutiny of FCA requirements included:
    - Release of tax free cash without the need to drawdown any income until a much later date (not possible with the two DB schemes)
    - Control over investment strategy for the two pots
    - Pots of sufficient size that income, when needed, can be taken from the dividend without the need to touch the capital sums
    - IHT efficient, the pots can pass to our children tax free on death prior to age 75
    - income tax efficient, taking into account 2 x individual personal allowances and lower tax rate
    - DB schemes reduce by 50% on your death, and expire on death of spouse
    For information, we are both 55.
    My 52x figure related to the annual pension I would have received under my ex-employer’s FS/DB scheme had I retired at 55. Given our ages, the state pension is irrelevant for quite some time to come.
    Last edited by Skyman; 8th September 2019 at 10:34.

  16. #366
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    Quote Originally Posted by g40steve View Post
    Excuse the question but are you transferring out of FS/DB scheme with a calculated lump to manage for the rest of your life?
    The figures x24, x36 are these yearly pension not including state pension at 65+?
    I have 35 years in University scheme & just looking at options, cheers.
    I'm not sure what I'm doing yet Steve as regards final salary or drawdown, I'll have to see an adviser
    The figures of 24 and 36 are multiples of your final salary after that's been worked out

    ie £20,000 x 36 or 50 if you're lucky.
    I think the multiple the actuaries used for my last calculation was 32.

    I would have retired earlier but the reduction factor used for going at 60 was 36.9 % which means I'd have lost over a third.
    I think the average reduction factor is about 4 or 5%/annum which isn't bad.
    Even drawing my final salary at 63 I'll lose 16.7%

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  17. #367
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    Quote Originally Posted by g40steve View Post
    Excuse the question but are you transferring out of FS/DB scheme with a calculated lump to manage for the rest of your life?
    The figures x24, x36 are these yearly pension not including state pension at 65+?
    I have 35 years in University scheme & just looking at options, cheers.
    Yes the CETV is cash equivalent transfer value - the lump some they will give you for you to give up your DB pension. My 36x figure is the CETV obtained on Friday divided by the annual pension I would get today not including SP.

  18. #368
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    Quote Originally Posted by valleywatch View Post
    Thanks for that!

    Nights are a killer! I have for the past few years, swapped my night shifts....(get extra money for doing them..so easy to swap them).

    I am taking up a pension level option type thing...which basically will give me an extra yearly pension (until I get my state pension.....if Im still around!) at 66...then it will drop a little at 66...........had a look at it..IF i live to about 74...thats when Id start to lose out (by taking the level pension option thingy) a little financially that is,...but...will I still be alive then? if I am? will I still be healthy enough to go to Thailand twice a year and do what Im doing now?!

    Will I need more money then...if I end up in a care home...the council get my house money pensions anyway!

    We only live once...this isnt a rehearsal...live life I say!
    Hoorah to that.
    It's ok having a fat bank balance at 80 odd but what quality of life have you got??
    Everyone knows somebody who've not had the chance to enjoy their pensions, if any.
    My mate retired in April 2015 with a good pension scheme, 11 months later out on his mountain bike, heart attack, and that was that.

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  19. #369
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    Quote Originally Posted by Maris View Post
    Yes the CETV is cash equivalent transfer value - the lump some they will give you for you to give up your DB pension. My 36x figure is the CETV obtained on Friday divided by the annual pension I would get today not including SP.
    Agreed.

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    Quote Originally Posted by RD200 View Post
    Hoorah to that.
    It's ok having a fat bank balance at 80 odd but what quality of life have you got??
    Everyone knows somebody who've not had the chance to enjoy their pensions, if any.
    My mate retired in April 2015 with a good pension scheme, 11 months later out on his mountain bike, heart attack, and that was that.

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    Indeed. One ex boss of mine died within a year of retirement. He had been with the company 40 years plus, and notionally his pot would have been worth £1.5m plus. I am sure his spouse receiving a 50% pension for the balance of her lifetime would get nowhere near that.

  21. #371
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    The state flat rate pension at roughly £169/week isn't much and some people who've worked all their lived will unfortunately fall short of that.
    What will people who haven't even worked the minimum of (I think) 10 years get ??
    Do they get credits or benefits ?

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  22. #372
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    Quote Originally Posted by Skyman View Post
    Indeed. One ex boss of mine died within a year of retirement. He had been with the company 40 years plus, and notionally his pot would have been worth £1.5m plus. I am sure his spouse receiving a 50% pension for the balance of her lifetime would get nowhere near that.
    There are people on the MSE site in the pensions annuities and retirement part who think cashing £1.5m in is too risky and should be left in a final salary

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    Those posting that they are going to transfer out of their DB pension schemes might find it's not as simple as they think. Due to increasing concerns over the suitability of doing this many advisors are refusing to take on the appraisal work (or can't get insurance cover) & those that do are charging very high fees. You are legally required to take advice before moving so don't just think you can ignore this.

    In addition to this some pension providers are now refusing to take in transfers from DB schemes as they do not want to be put in the position of being in any way liable should transfering prove to have been a poor decision.

    It's not just about the guaranteed annual pension, you need to consider the benefits as well. Is there a widow/spouse's pension? What level is it? What happens to the pension pot when she/he dies (assuming you go first)? Is there any guaranteed annual rise?

    Of course there are advantages to controlling the pot yourself: you may feel you can invest it to produce a higher annual pension, if you die your spouse still has access to the same level of annual pension & when she dies your children get the residue without any IHT issues. For some people moving the funds out is a good idea.

    In general the reason CETV multipliers are going up is because the fund managers are struggling to fund the pensions they are paying out so they want as many future pensioners off the books as possible. They aren't offering high transfer values out of the goodness of their hearts: they want you to take the risk.

  24. #374
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    Quote Originally Posted by RD200 View Post
    There are people on the MSE site in the pensions annuities and retirement part who think cashing £1.5m in is too risky and should be left in a final salary

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    We all have differing views of risk. My personal view is that if you do not transfer then in reality the £1.5m in this example is irrelevant. You may never receive anything approaching that amount via you and your spouse’s pension. Equally, you may eventually exceed it. That is all the risk/reward of the Pension Fund. Me, I prefer to control my own financial destiny and, just as importantly, my two children for whom housebuying, pension planning etc will be far from easy. I would say, however, that I would not consider a transfer if the CETV was less than £500,000 minimum regardless of circumstances.

  25. #375
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    Quote Originally Posted by RD200 View Post
    It's ok having a fat bank balance at 80 odd but what quality of life have you got??
    At 80 a lot of people are going to need to move into care as they can't look after themselves: unless you want to live in a horrible dump that's a very expensive propostion so a healthy bank balance will be very useful.

  26. #376
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    Quote Originally Posted by Skyman View Post
    This was certainly the approach adopted by our IFA and the independent pension advisor. Both our pensions will have transferred out by the end of the year. In no particular order, our drivers, which satisfied the increasingly strict scrutiny of FCA requirements included:
    - Release of tax free cash without the need to drawdown any income until a much later date (not possible with the two DB schemes)
    - Control over investment strategy for the two pots
    - Pots of sufficient size that income, when needed, can be taken from the dividend without the need to touch the capital sums
    - IHT efficient, the pots can pass to our children tax free on death prior to age 75
    - income tax efficient, taking into account 2 x individual personal allowances and lower tax rate
    - DB schemes reduce by 50% on your death, and expire on death of spouse
    For information, we are both 55.
    My 52x figure related to the annual pension I would have received under my ex-employer’s FS/DB scheme had I retired at 55. Given our ages, the state pension is irrelevant for quite some time to come.
    Regarding iht after passing at 75 are the pots taxed at 40%?

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    Quote Originally Posted by Mr Pointy View Post
    At 80 a lot of people are going to need to move into care as they can't look after themselves: unless you want to live in a horrible dump that's a very expensive propostion so a healthy bank balance will be very useful.
    Excellently put

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  28. #378
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    Quote Originally Posted by Skyman View Post
    We all have differing views of risk. My personal view is that if you do not transfer then in reality the £1.5m in this example is irrelevant. You may never receive anything approaching that amount via you and your spouse’s pension. Equally, you may eventually exceed it. That is all the risk/reward of the Pension Fund. Me, I prefer to control my own financial destiny and, just as importantly, my two children for whom housebuying, pension planning etc will be far from easy. I would say, however, that I would not consider a transfer if the CETV was less than £500,000 minimum regardless of circumstances.
    The £500,000 figure is exactly what I've had in mind.

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  29. #379
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    Early retirement

    Quote Originally Posted by RD200 View Post
    What would you say the average transfer value is that you see ?

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    Varies hugely from well over a million to a few thousand. Ave in the uk is around 275k though
    Last edited by RustyBin5; 8th September 2019 at 11:24.

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    Quote Originally Posted by Matdaytona View Post
    Regarding iht after passing at 75 are the pots taxed at 40%?
    My understanding is beneficiaries ( in this case, my two children) would pay the marginal rate of income tax on the sum(s) drawn down.
    Last edited by Skyman; 8th September 2019 at 11:53.

  31. #381
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    Quote Originally Posted by Mr Pointy View Post
    Those posting that they are going to transfer out of their DB pension schemes might find it's not as simple as they think. Due to increasing concerns over the suitability of doing this many advisors are refusing to take on the appraisal work (or can't get insurance cover) & those that do are charging very high fees. You are legally required to take advice before moving so don't just think you can ignore this.

    In addition to this some pension providers are now refusing to take in transfers from DB schemes as they do not want to be put in the position of being in any way liable should transfering prove to have been a poor decision.

    It's not just about the guaranteed annual pension, you need to consider the benefits as well. Is there a widow/spouse's pension? What level is it? What happens to the pension pot when she/he dies (assuming you go first)? Is there any guaranteed annual rise?

    Of course there are advantages to controlling the pot yourself: you may feel you can invest it to produce a higher annual pension, if you die your spouse still has access to the same level of annual pension & when she dies your children get the residue without any IHT issues. For some people moving the funds out is a good idea.

    In general the reason CETV multipliers are going up is because the fund managers are struggling to fund the pensions they are paying out so they want as many future pensioners off the books as possible. They aren't offering high transfer values out of the goodness of their hearts: they want you to take the risk.
    You last comment may be true in a very few schemes but it’s not the norm. The main reason CETVs have been rising is gilt yields and long term annuity rates falling. This means the trustees must use higher multiplier to “capitalise” the benefits when working out the CETV.

  32. #382
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    Quote Originally Posted by Matdaytona View Post
    Regarding iht after passing at 75 are the pots taxed at 40%?
    The pots are taxed but not for IHT

  33. #383
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    Quote Originally Posted by RustyBin5 View Post
    Varies hugely from well over a million to a few thousand. Ave in the uk is around 275k though
    Ok, thanks for that.

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  34. #384
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    I retired at 48 with a great pension and for 5 years lived in Spain or Oz for the winters...bought the fast cars and nice watches and travelled the world but by 53 it became boring not having something to get up for.

    Don't need the money but went back to part time work and probably will do until i drop dead.

    The bonus is i choose what i do and what hours...around 4 hours per day and 12 weeks holiday per year.

    If i don't like the job i am doing i move on.

    Don't wait for retirement and think it's the golden bullet...it can be disappointing after a while.

    Mark

  35. #385
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    Quote Originally Posted by MartynJC (UK) View Post
    Busy looking at houses at various places uk side. Eastbourne is looking interesting (no jokes please!!).

    Martyn
    Eastbourne’s a great place to live; there’s always stuff going on and it’s not just for pensioners. I live about ten miles drive from the town itself in a quiet country village.
    There are lots of pensioners though and driving around can be a tad frustrating at times, especially if you’re in a hurry.

    Whilst I’m no expert, I’ve a reasonable idea of the good and less good places to live in the area, feel free to PM me if you want any local knowledge!

  36. #386
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    Quote Originally Posted by mjc1216 View Post
    I retired at 48 with a great pension and for 5 years lived in Spain or Oz for the winters...bought the fast cars and nice watches and travelled the world but by 53 it became boring not having something to get up for.

    Don't need the money but went back to part time work and probably will do until i drop dead.

    The bonus is i choose what i do and what hours...around 4 hours per day and 12 weeks holiday per year.

    If i don't like the job i am doing i move on.

    Don't wait for retirement and think it's the golden bullet...it can be disappointing after a while.

    Mark
    IF I could have 12 weeks holiday a year...and work 4 hours per day somedays..........I quite possibly would retire later.

    Unfortunately though...I imagine the vast majority are unable to do what youve done!

  37. #387
    https://assets.publishing.service.go...16_-_FINAL.pdf

    Interesting data from a couple of years ago shows the mean and median UK pension incomes (among taxpayers) are £17,100 and £14,300 respectively. Regional variations are quite striking.

    https://www.theguardian.com/money/20...test-hmrc-data

  38. #388
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    Quote Originally Posted by valleywatch View Post
    IF I could have 12 weeks holiday a year...and work 4 hours per day somedays..........I quite possibly would retire later.

    Unfortunately though...I imagine the vast majority are unable to do what youve done!
    Bang on !!

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    Quote Originally Posted by mjc1216 View Post
    I retired at 48 with a great pension and for 5 years lived in Spain or Oz for the winters...bought the fast cars and nice watches and travelled the world but by 53 it became boring not having something to get up for.

    Don't need the money but went back to part time work and probably will do until i drop dead.

    The bonus is i choose what i do and what hours...around 4 hours per day and 12 weeks holiday per year.

    If i don't like the job i am doing i move on.

    Don't wait for retirement and think it's the golden bullet...it can be disappointing after a while.

    Mark
    Clearly we are all different. I stopped work five years ago, never ever missed it since that time - my career was just that, lucrative but not a heartfelt vocation. Plenty to keep me occupied. Up at 7.45 every day, ready go, but my boy Max (middle aged collie cross) sees to that. Age 55 saw me take pension draw down, but only to use the CFS to buy daughter a house. No intention of touching the pot for several years to come. Bring on the next few years. Cross fingers, they should be awesome.

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    Quote Originally Posted by RD200 View Post
    I would have retired earlier but the reduction factor used for going at 60 was 36.9 % which means I'd have lost over a third.
    I think the average reduction factor is about 4 or 5%/annum which isn't bad. Even drawing my final salary at 63 I'll lose 16.7%
    Don't forget to factor in the 2 years lesser contributions you'll be putting in. Employee contributions in my firm were around 17% of salary.

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    Quote Originally Posted by broxie View Post
    Don't forget to factor in the 2 years lesser contributions you'll be putting in. Employee contributions in my firm were around 17% of salary.
    He’s talking about a final salary scheme so contributions aren’t relevant, just the early retirement factor which in his case is quite harsh compared to market norms.

  42. #392
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    Quote Originally Posted by broxie View Post
    Don't forget to factor in the 2 years lesser contributions you'll be putting in. Employee contributions in my firm were around 17% of salary.
    My final salaries have been deferred since 1990 (16 years) and 1996 (6 years)

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  43. #393
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    Quote Originally Posted by RustyBin5 View Post
    You last comment may be true in a very few schemes but it’s not the norm. The main reason CETVs have been rising is gilt yields and long term annuity rates falling. This means the trustees must use higher multiplier to “capitalise” the benefits when working out the CETV.
    An interesting article covering this was posted elsewhere:
    https://henrytapper.com/2016/12/04/w...culously-high/

  44. #394

  45. #395
    Grand Master RustyBin5's Avatar
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    And with annuities being based on long term gilt yields - if you assume they will not change then you have to factor in increased longevity too. Life expectancy increasing year on year is also driving annuity rates down lower

  46. #396
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    If you wanted a joint escalating annuity with 500k you wouldn't get much.
    What does this mean for final salary transfer values?

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  47. #397

    Early retirement

    Quote Originally Posted by RD200 View Post
    What does this mean for final salary transfer values?

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    Probably 40x.

    The ‘my benefits’ page on my employers intranet tells me that my employer is contributing an additional 60% of my annual salary into my DB pension scheme, just to meet its 60ths non-contributory obligation for a retirement age of 60. And that’s before the recent further fall in gilt yields.

    Think I’ll be in the firing line once the next round comes up, as it’s only us time served oldies who still get the DB pension.

    Anyone who joined in the last 10 years gets a standard 15% DC.
    Last edited by noTAGlove; 19th September 2019 at 14:31.

  48. #398
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    Quote Originally Posted by noTAGlove View Post
    Probably 40x.

    The ‘my benefits’ page on my employers intranet tells me that my employer is contributing an additional 60% of my annual salary into my DB pension scheme, just to meet its 60ths non-contributory obligation for a retirement age of 60. And that’s before the recent further fall in gilt yields.

    Think I’ll be in the firing line once the next round comes up, as it’s only us time served oldies who still get the DB pension.

    Anyone who joined in the last 10 years gets a standard 15% DC.
    Hahahaha 'time served oldies'
    Same where I work, hardly any skilled men under 55 or so.
    A multiple of 40x would be great

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  49. #399

    Early retirement

    Quote Originally Posted by RD200 View Post
    A multiple of 40x would be great
    Only if you decide to cash in your chips.

    Very easy to breach the LTA at 40x, so be careful.

    I’m sticking with my DB. Keep all the risk on my employer, and better the devil you know.

  50. #400
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    Quote Originally Posted by noTAGlove View Post
    Only if you decide to cash in your chips.

    Very easy to breach the LTA at 40x, so be careful.

    I’m sticking with my DB. Keep all the risk on my employer, and better the devil you know.
    40× mine wouldn't be anywhere near the LTA sadly.
    I'm still not decided on which way to go, final salary or drawdown.

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