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Post by tom73 on Nov 28, 2020 21:12:28 GMT
Payment of pension commenced May 2005. Recipient reaches State Pension age in May 2021. By how much will the TfL pension reduce from May 2021?
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Post by revupminster on Nov 29, 2020 7:16:07 GMT
Depends on what type of pension you took in 2005. If you took the LU pension that gives you an increased pension before you are retirement age and goes down when you receive the state pension but you still get the same monthly payment made up of the LU pension and state pension.
That's what I did because it was the best value because retiring early reduces your pension by a lot until you get the state pension which gives a big rise in income but you don't know how long you will live to collect it.
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Post by revupminster on Nov 29, 2020 13:45:53 GMT
Pension at retirement age 40/60 = full LU pension £100 + £50 state pension = £150. You can never beat doing the full 40 years in the pension fund unless your retired early as sick.
Retire early on fixed pension £50 + £50 State pension at retirement age =£100. Means you would have to live on £50 if you retired at 50 for the next 15/18 years to pension age. Retiring early really knocks your amount down by as much as half as you are expected to be paid pension longer
Retire early on a enhanced pension £75 then at retirement age £50 state pension + £25 reduced LU pension = £75. This gives a level pension from retirement from LU and into state retirement. The LU pension does rise every year.
I have tried to illustrate the idea as simply as I can. The figure bear no relationship with real life. Some people may also have an AVC if they cannot reach the 40 years in the pension fund.
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castlebar
Planners use hindsight, not foresight
Posts: 1,316
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Post by castlebar on Nov 29, 2020 15:11:24 GMT
Pensions are a very complex issue
Rules change
Projected benefits can change
Annuity rates constantly change (they are at historic low levels now)
Benefits for new scheme entrants can change whilst benefits for existing members are protected
Many years ago, many people in public service joined what were known as "final salary schemes". lt meant that on day one of joining the scheme, you knew that your benefits on retirement would be a tax-free lump sum and a percentage of you final salary, entirely depending on your completed years of service. 40 years of service meant you could (DEPENDING ON the rules of the scheme you joined) get a maximum pension of two thirds of final salary, (but many scheme rules paid less, such as half salary).
Things changed.
1) Life expectancy went up, so scheme trustees found that the funds they were managing were being diminished by retired members living longer
2) Investment returns failed
3) Inflation fell meaning that annuity rates (look it up - life's too short) fell too
4) Originally projected benefits were found to be based on 2) above, so people got less than they were expecting to get. Some funds had insufficient money to pay everybody (Daily Mirror, Top Shop etc)
SO, many schemes fell away from "final salary related benefits" and changed to "money purchase" type arrangements. This meant that benefits were based on investment performance and annuity rates, and nobody knew what they were going to get at retirement until it got to the point when they actually retired. In some companies, you could sometime buy "added years of service", but l think that has stopped now
A V Cs are Additional Voluntary Contributions, which provide some tax benefits in trying to increase the size of your final pension pot. But here again, it depends on 2) above - how good the fund managers are.
You then buy an annuity (see wikipedia)
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DWS
every second count's
Posts: 2,487
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Post by DWS on Nov 29, 2020 19:50:59 GMT
Payment of pension commenced May 2005. Recipient reaches State Pension age in May 2021. By how much will the TfL pension reduce from May 2021? Has the recipient contacted the TfL Pension Fund Office ? |
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