A bridging pension option - good deal?
Discussion
My firm have a voluntary severance programmme of which I may be part of.
For the first time, they are offering an optional bridging pension whereby some of the severance payment would be held and paid in an enhanced pension up to MRA at which time my company pension would reduce and be made up by the state pension.
The cynic in me sees it as a way of holding onto thier cash longer and paying out over a few years. They are offering a larger tax-free lump sum as well (they are in final negotiations with the Trustees).
From NRA to death my company pension would be reduced and as always with pensions knowing when you'll die would be very useful!
My question is, is this a model used before? Any pitfalls?
Features:
Thanks
For the first time, they are offering an optional bridging pension whereby some of the severance payment would be held and paid in an enhanced pension up to MRA at which time my company pension would reduce and be made up by the state pension.
The cynic in me sees it as a way of holding onto thier cash longer and paying out over a few years. They are offering a larger tax-free lump sum as well (they are in final negotiations with the Trustees).
From NRA to death my company pension would be reduced and as always with pensions knowing when you'll die would be very useful!
My question is, is this a model used before? Any pitfalls?
Features:
- Larger tax-free lump sum at leaving
- Reduced serance payment
- Increased compamny pension up to NRA
- Reduced pension from NRA to death.
Thanks
I could probably guess which actuarial firm is advising your employer/trustees!
I guess a big question is whether you are planning on retiring so could usefully take the enhanced income now? Or whether you are hoping to find new work and thus don’t really need the immediate enhanced income but would prefer to defer the value of it until a later date when you do want to retire.
Might be worth asking your employer if they will pay for or make a contribution towards financial advice to help you make this decision as it’s unlikely to be clear cut.
I guess a big question is whether you are planning on retiring so could usefully take the enhanced income now? Or whether you are hoping to find new work and thus don’t really need the immediate enhanced income but would prefer to defer the value of it until a later date when you do want to retire.
Might be worth asking your employer if they will pay for or make a contribution towards financial advice to help you make this decision as it’s unlikely to be clear cut.
My firm will pay 500+vat for regulated IFA advice.......initially I plan to retire (Ill still be 59) but I have an open mind!
e=Zigster]I could probably guess which actuarial firm is advising your employer/trustees!
I guess a big question is whether you are planning on retiring so could usefully take the enhanced income now? Or whether you are hoping to find new work and thus don’t really need the immediate enhanced income but would prefer to defer the value of it until a later date when you do want to retire.
Might be worth asking your employer if they will pay for or make a contribution towards financial advice to help you make this decision as it’s unlikely to be clear cut.
[/quote]
e=Zigster]I could probably guess which actuarial firm is advising your employer/trustees!
I guess a big question is whether you are planning on retiring so could usefully take the enhanced income now? Or whether you are hoping to find new work and thus don’t really need the immediate enhanced income but would prefer to defer the value of it until a later date when you do want to retire.
Might be worth asking your employer if they will pay for or make a contribution towards financial advice to help you make this decision as it’s unlikely to be clear cut.
[/quote]
pauljdh said:
My firm will pay 500+vat for regulated IFA advice.......initially I plan to retire (Ill still be 59) but I have an open mind!
If you are 59 now your retirement age is 66/67? Your nominal life expectancy is around 84 so you're gaining 7 years of extra payment for 18 years of reduced income (or more, if you live longer).Have you had a Stste Pension Forecast? Are your NI contributions fully paid up?
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