Retirement, timing and the tax year.
Discussion
You should be able to get a projection from the trustees - that will tell you the discount for early retirement and hence what the pension will be relative to your current income. I think this is probably a bigger factor in the decision than whether you pay slightly more tax in one year? 39 years in a DB scheme must be a fantastic thing to have. Just sit back and figure out what your lump sum will be. If you are feeling brave you could also ask for a transfer value - it is possible it is much higher than you think and hence going for a drawdown option may give you considerably more income (but with more risk).
In your particular situation - job for life from age 16 - I can't see that it will make the slightest difference what time of year you retire. You pension will be lower then your earnings so you can't possibly end up in a higher tax band.
The main things to consider are,
The main things to consider are,
- Will you be hit with an "early retirement factor" if you draw pension at age 55, and
- Do you want any tax free cash.
I don't think a trade union is a good idea. In my experience their pensions knowledge is pretty basic and maybe flawed even. They often need to go and get professional external help when they have to give their opinion etc on a particular point. I doubt if they are formally authorised to give financial advice, so they may be able to recommend a tame IFA.
Personally I'd steer clear of a trade union and seek a proper IFA. Your accumulated DB pension will have a substantial value, and you have many options once you reach 55. And, you only have one shot at getting things right: once set up you will not be able to go back.
R.
Personally I'd steer clear of a trade union and seek a proper IFA. Your accumulated DB pension will have a substantial value, and you have many options once you reach 55. And, you only have one shot at getting things right: once set up you will not be able to go back.
R.
W124Bob said:
Any thoughts on when to time early retirement in relation to the tax year. I will be 55 in Feb, PAYE job and the pension is a DB one, 39 years in the same industry.
Are you public sector, if so, what scheme? If so, and in some schemes, the first pension increase is proportionate depending when in the year you retired. Your first (and only your first) pension increase works this way. In Apr 17 you would receive a proportion of the annual rise in pension, directly related to the proportion of the year you have received that pension. So, in your case, in your first year, i.e Apr 17, you would receive about 83% of the total pension increase (which will be the benchmark inflation figure for the month in with it is calculated, this month.. Sept 16). So if the inflation rate is say, 2.5%, you will receive about a 2.1% increase. In all subsequent years you will receive the full increase, i.e. the Sept inflation figure for the preceeding year.
Most people get no choice about when their last day of service is but, for the few who do, early in the tax year is *usually* best - but take advice that's personal to you. So, in summary, if you leave just after Apr and you get a bigger rise in your pension the following year, but for every month you stay in past Apr you are probably earning at least twice what you would draw in terms of your pension if you were retired anyway.
I would take a look at your scheme details, too. If they revolve around, for instance, your past three years salary, make sure you don't retire until you hit the box which gives you the best retirement numbers. Take qualified advice that's relevant to you.
Train driver, 55 on the 14th of Feb. Resignation goes in on the 15th, all of my annually leave used for the notice period, final payday will be 24th of March. So just right for the end of the tax year. Another BR dinosuar leaves the industry, 38 years an 5 months. Lots of plans, but nothing daft. Got a model railway to build!
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