Retiring at 60 ?

[Stef]

I am 48 years old and have always wanted to retire at 60. I have 27 years service. I will be 60 years old in 2028. If i do retire at 60 am i correct in thinking that i will get all of my age 60 part of my pension - but my age 65 part of my pension will be redused by 5% for every year i take it early - therefore my age 65 benefits will be redused by 25% because i am taking it 5 years early? Or do they add both 60 and 65 pensions together then reduse the toatal by 25%? Sorry for my ignorance on this matter, would be grateful if someone wiser could answer this for me, thanks.

[stroller]

Hi Stef,

You are correct you would get your NRA 60 pension in full and a 25% deduction on your NRA 65 pension

[RobertT]

Please bear in mind that figures quoted on your pension statement for your NRA65 pension are based on you actually working until 65 on the same hours/pay as now, and are only really a guestimate of what you might get. If you leave and take your NRA65 at 60 those figures will not apply and they will effectively be reduced twice.
Firstly because you’re working 5 years less, and then again by 25% for taking it 5 years early.

[fly-catchers]

If you do retire at 60 and get the reduced 65 part of the pension does that bit only start getting paid to you when you actually get to 65? Also could you at 60 get a accurate statement of what you would get from the 65 part without having to commit yourself to retiring at 60?

cheers!

[RobertT]

If you do retire at 60 and get the reduced 65 part of the pension does that bit only start getting paid to you when you actually get to 65?

No, the whole point of it being reduced is that you’re taking it before the normal age.
For members of the RMPP, all pension accrued up to 1st April 2010 has a normal pension age of 60 and all pension after that date it’s 65. So if you take either element before the normal age, it will be reduced, normally by 5% per year.

Also could you at 60 get a accurate statement of what you would get from the 65 part without having to commit yourself to retiring at 60?
cheers!

I think what normally happens is that the pensions centre in Chesterfield writes to you about 3 months before you're 60 with various options of taking your pension/s. One of those options should be what the NRA65 part would be worth if you also take that at 60.
And if you take just your NRA60 pension and leave, you should get a deferred members statement each year telling you how much your NRA65 pension is worth.

[Glenno]

I am 48 years old and have always wanted to retire at 60. I have 27 years service. I will be 60 years old in 2028. If i do retire at 60 am i correct in thinking that i will get all of my age 60 part of my pension - but my age 65 part of my pension will be redused by 5% for every year i take it early - therefore my age 65 benefits will be redused by 25% because i am taking it 5 years early? Or do they add both 60 and 65 pensions together then reduse the toatal by 25%? Sorry for my ignorance on this matter, would be grateful if someone wiser could answer this for me, thanks.

Correct me if I am wrong RobertT, this person can retire and take all NRA60 benefits @60, and deffer NRA65 benefits until that time obviously only accumilating APR from 60 - 65 ? Deferred ?

[Stef]

Please bear in mind that figures quoted on your pension statement for your NRA65 pension are based on you actually working until 65 on the same hours/pay as now, and are only really a guestimate of what you might get. If you leave and take your NRA65 at 60 those figures will not apply and they will effectively be reduced twice.
Firstly because you’re working 5 years less, and then again by 25% for taking it 5 years early.

Thanks for your reply RobertT thats a very interesting point that youve made. I never actually thought about that. Bit of a blow knowing my NRA65 pension will in effect be reduced twice. I'm glad you've told me this, thanks mate.

[RobertT]

I am 48 years old and have always wanted to retire at 60. I have 27 years service. I will be 60 years old in 2028. If i do retire at 60 am i correct in thinking that i will get all of my age 60 part of my pension - but my age 65 part of my pension will be redused by 5% for every year i take it early - therefore my age 65 benefits will be redused by 25% because i am taking it 5 years early? Or do they add both 60 and 65 pensions together then reduse the toatal by 25%? Sorry for my ignorance on this matter, would be grateful if someone wiser could answer this for me, thanks.

Correct me if I am wrong RobertT, this person can retire and take all NRA60 benefits @60, and deffer NRA65 benefits until that time obviously only accumilating APR from 60 - 65 ? Deferred ?

Yes that’s correct.

[RobertT]

Please bear in mind that figures quoted on your pension statement for your NRA65 pension are based on you actually working until 65 on the same hours/pay as now, and are only really a guestimate of what you might get. If you leave and take your NRA65 at 60 those figures will not apply and they will effectively be reduced twice.
Firstly because you’re working 5 years less, and then again by 25% for taking it 5 years early.

Thanks for your reply RobertT thats a very interesting point that youve made. I never actually thought about that. Bit of a blow knowing my NRA65 pension will in effect be reduced twice. I'm glad you've told me this, thanks mate.

Yes that’s a common mistake and is one of the biggest downsides to the change from final salary to career average salary pension in 2008. As before then, the normal retirement date for all RM pension was 60.

[Fatboyslim]

Right from the outset. If everything does to plan. I'm looking at the possibilities of getting out at 55.

I've got 34 years in so far. And I have a further three possible. I fear for my longterm health doing rotational shifts for 30+ years. Later on in life. I do not want to be walking out the door at 60-65. With the prospect of little retirement.

I know the implications of the NRA60. A 25% hit drawing it at 55. But, it's the NRA/CD 65 I'm struggling with. Mention was of the 25% plus a further 25% hit taking it early at 60. This equates to a 50% hit. Yes? If I stopped contributing to my NRA 65 at 55. I would get walloped with a 25% plus 25% further. This equates to 100%. Making the contributions I have paid since circa 2008 worthless? This cannot be right, surely?

Any replies - please - I'm struggling with this one...!

[RobertT]

Right from the outset. If everything does to plan. I'm looking at the possibilities of getting out at 55.

I've got 34 years in so far. And I have a further three possible. I fear for my longterm health doing rotational shifts for 30+ years. Later on in life. I do not want to be walking out the door at 60-65. With the prospect of little retirement.

I know the implications of the NRA60. A 25% hit drawing it at 55. But, it's the NRA/CD 65 I'm struggling with. Mention was of the 25% plus a further 25% hit taking it early at 60. This equates to a 50% hit. Yes? If I stopped contributing to my NRA 65 at 55. I would get walloped with a 25% plus 25% further. This equates to 100%. Making the contributions I have paid since circa 2008 worthless? This cannot be right, surely?

Any replies - please - I'm struggling with this one...!

As has been mentioned previously, the figures for your NRA65 pension are based on you actually working until 65 and are only an estimate of what you might get – they are not written in stone. The NRA65 element of your pension relates to your RM service from April 2010 onwards. In practice, the further away from 65 you are the less accurate it’s likely to be. But if you assume that your estimate is correct:

If you were to take your NRA65 at 60 you will be paying in for 5 years less and so your pension will obviously be worth less than the estimate. And what you’ve actually accrued up to 60 will take a 25% hit.

Using a ‘back of an envelope’ calculation, let’s say that your estimate is for a NRA65 pension of £10,000 per year based on 20 years service from April 2010 to your 65th birthday. That’s an average accrual rate of £500 per year. So by taking it at 60 your pension would only be worth £7,500. That would then be reduced by 25% for taking it 5 years early. Leaving a NRA65 pension at 60 of £5,625.

However if you take your NRA65 at 55, then you’ll be paying in for 10 years less, so what you actually accrue will be a lot less than the estimate. And what you’ve built up will take a 50% hit.

So your £10,000 per year estimate at 65 would be reduced to £5,000 and that would take a 50% hit for taking it 10 years early, leaving a NRA65 pension at 55 of £2,500.

*Please bear in mind:
The pension you actually get will be based on your individual service, not on an estimate.
The figures I’ve used are only for example purposes and the average accrual rates are just that – averages. In practice your pension will accrue quicker with the more service you have due to higher wages(hopefully) and the compounding effect of each yearly increase by inflation. As a result the actual accrual rate will be lower in the early years and higher in the later years and so the pension you get would probably be even less.

[Fatboyslim]

Many thanks for the quick and concise reply. Very much appreciated.

I think i've got my head round it now. I did a rough 'fag-packet' calculation of the NRA taking a 25% hit. I can live with. And the NRA 65 pension making up the 'difference'. So, the NRA 60 remained intact. Writing off the NRA 65. That I can live with. As my plans are calculated on the NRA 60 only.

Many thanks. I very much appreciate all information.

FBS.

[RobertT]

That's no problem, I hope I've helped.

[Dunravern]

Iam hopeing to retire at 60 and have been paying into the flexiplan avc growth fund .should I move it to the lifestyle option or leave it in growth fund . I will be 51 next birthday

[RobertT]

Iam hopeing to retire at 60 and have been paying into the flexiplan avc growth fund .should I move it to the lifestyle option or leave it in growth fund . I will be 51 next birthday

The lifestyle option starts to change your investments from when you’re 8 years away from your chosen retirement age, so in your case from age 52. So changing now would have no effect for a year or so!

There are pros and cons to the lifestyle option. The pros being that your money is automatically moved from more volatile to less volatile funds so you don’t have to think about doing it yourself. The idea being that you will preserve the gains you’ve made over the years of investing in the riskier funds and you’re less likely to be affected by any major market changes afterwards.

However you may miss out on some potential growth by moving funds too early. Or if for example, there’s a big stock market crash just beforehand, your investments would go down in value and because they’ve been moved them to a safer fund, they will be less likely to regain their value during a market recovery.

It is a personal choice really, but I invest in the Growth fund aswell via both Bonusplan(section C) and Flexiplan and plan to actively change my funds when I think it’s appropriate to do so, based on market conditions.

There’s a useful guide on the RMPP website about AVC’s and their investment options: http://www.royalmailpensionplan.co.uk/s ... .06.11.pdf" onclick="window.open(this.href);return false;

Or if in any doubt I suggest your contact a local independent financial advisor. You can find one here: https://www.unbiased.co.uk/" onclick="window.open(this.href);return false;