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Taking Pension at 55

11 Sep 2018, 16:07

Hi Everyone,

I took VR back in 2012 and have a deferred pension of 22 years.

I will be 55 soon and intend taking both my NRA 60 /65 and small AVC pot early.

Can someone confirm if the 5% reduction per year is off the total of the basic pension/ pension supplement and pension increase amount?

So in my case NRA 60 Basic Pension £8083.10
Supplement to state pension age £1135.85
Pension Increase Amount £958.77
Total £10177.72

So do I lose 25% of the total or is it worked out differently?

Thanks for any help


Taking Pension at 55

11 Sep 2018, 16:59

By the sound of it you are a deferred section C member, with approximately 20 years of NRA 60 pension and 2 years of NRA65.

There is a 5% reduction for each full year you take your pension/s early. So taking them both at 55 will mean a 25% reduction on your NRA60 figures and a 50% hit on your NRA65.

You also have the option of giving up some pension to get a tax free lump sum, but that will also see a similar early payment reduction.

There has been some debate on these forums as to how much the reduction is for the supplement and how it's worked out. I don't think there's been a definitive answer so I would suggest just waiting until you get your figures from the pensions dept.
You will get a supplement for both NRA60 & NRA65 pensions.

The normal use for your AVC's assuming its either Bonusplan or Flexiplan, is to fund some or all of the tax free lump sum, so you don't have to give up so much pension.
But they can also be transferred out to another pension arrangement and used to buy an annuity or for drawdown, but tax is more likely to be an issue.

I've never heard of the 'pension increase amount' I'm afraid. But there is a 'pension input amount' which is how much your total RMPP pot has increased in value over the previous year. As a rough guide, your total pot value is 20x your pension/s.
It is indirectly included in the figures you quoted, but is not an amount paid out to you!
The pension input amount is defined here.

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