Is your pension enhanced at 55 advice please

[stroller]

Hi everybody,

In our office VR in being offered, i am 53 in August and will be just over 2 years before i can call in my pension at 55.

I am tempted to take the VR and leave and call in my pension at 55, i have done 32 years service but people i work with say i should stay until i am 55 and see if VR comes again and go then.

My thoughts are if VRis not offered again i would be losing out on about £50k about £42k after tax, is that a silly way of thinking?

do you think VR will still be around in 2 years and will it be still be on these terms, what advantages pension wise do you get at 55 is it enhanced? any ideas how much my pesion and lump sum might be for 34 years service?

look forward to you replies and what would you do in my shoes?

[osgoody1970]

you lose 5% a year by taking early at 55, I do not think it is enhanced.

[RobertT]

I’m no expert on VR / EVR and I’m sure someone will correct me if I’m wrong but:

Voluntary Redundancy(VR) is generally done on an office basis due to a revision or other major changes, so in general is probably not likely to be available again in 2 years time. Although that will obviously depend on individual office circumstances.

The maximum VR payout is 104 weeks pay, so increasing your service from 32 to 34 years probably won’t make a huge difference to the amount you’ll get, assuming it’s still available in 2 years time.

The first £30,000 of a VR payment is tax free, so if your £50k estimate is correct you should actually pay less tax than you think, although that would also depend on what other income you may in the tax year.

If you leave ‘now’ under VR and take your pension at 55 it will be reduced as osgoody1970 suggests by 5% per year. The only way your pension would ever be enhanced would be if you were taking EVR(Early Voluntary Retirement) or IHR(Ill Health Retirement).

As a general rule, taking any salary based pension before the normal retirement date is a mistake because of the actuarial reductions that are applied. So would taking VR, getting another job perhaps part time, and then taking your pension at 60 be another option?

[koolishy67]

Take it now don't know any thinking after 2years time . You know Royal Mail better than me

[arnold cheshire]

Hi everybody,

In our office VR in being offered, i am 53 in August and will be just over 2 years before i can call in my pension at 55.

I am tempted to take the VR and leave and call in my pension at 55, i have done 32 years service but people i work with say i should stay until i am 55 and see if VR comes again and go then.

My thoughts are if VRis not offered again i would be losing out on about £50k about £42k after tax, is that a silly way of thinking?

do you think VR will still be around in 2 years and will it be still be on these terms, what advantages pension wise do you get at 55 is it enhanced? any ideas how much my pesion and lump sum might be for 34 years service?

look forward to you replies and what would you do in my shoes?

it was offered a couple of years ago in our office but they didnt let anyone take it

[krussel]

I’m no expert on VR / EVR and I’m sure someone will correct me if I’m wrong but:

Voluntary Redundancy(VR) is generally done on an office basis due to a revision or other major changes, so in general is probably not likely to be available again in 2 years time. Although that will obviously depend on individual office circumstances.

The maximum VR payout is 104 weeks pay, so increasing your service from 32 to 34 years probably won’t make a huge difference to the amount you’ll get, assuming it’s still available in 2 years time.

The first £30,000 of a VR payment is tax free, so if your £50k estimate is correct you should actually pay less tax than you think, although that would also depend on what other income you may in the tax year.

If you leave ‘now’ under VR and take your pension at 55 it will be reduced as osgoody1970 suggests by 5% per year. The only way your pension would ever be enhanced would be if you were taking EVR(Early Voluntary Retirement) or IHR(Ill Health Retirement).

As a general rule, taking any salary based pension before the normal retirement date is a mistake because of the actuarial reductions that are applied. So would taking VR, getting another job perhaps part time, and then taking your pension at 60 be another option?

That is a great post

Stroller.


Other than taking your pension early is there the option of reducing your week to 3 days.

Would that effect your pension

[Dee Plish]

What you need to bear in mind is that EVR's are offered now under MTSF terms. MTSF is NOT covered by the legal protections of terms and conditions we got post-Privatisation. MTSF is due to be reviewed in January 2015, therefore the EVR terms within that agreement may or may not change, for better or worse or no difference at all. Nobody yet knows. EVR on offer now could possible be the best offer you'll get. And although this will leave a nice sum in the bank, you can still claim contributions based job seekers allowance (£72.40) for 182 days whatever the level of savings your lump sum will give you, as long as you can show you've been looking for work.

[dvbuk55]

My advice would be to take it now. You will be able to pay yourself for two years if the worst came to the worst but you may well be able to find part time work in the interim to claiming your pension @ 55. I would add a word of caution though in terms of earnings once you claim your pension because it is taxed and you'll be better off working less hours and paying less tax. Life expectancy is going up so I would assume you will continue to work after you claim your pension.

[DB1100]

My advice is to take it now,then take your pension at 55 you might be dead before you reach 66 or whatever age it is now also I can see a time when anyone with any sort of pension will not be eligible for the state pension or only get paid a small percentage of it.

[stroller]

Thanks for all your replies, they want 11 VR in our office so I would defo get it I wanted it, it is a gamble I know but I have told them to proceed with the paperwork which will be sent to me, then I have 10 days to say yes or no.

[N1-22postman]

If you have had enough of the job and are made a firm offer of VR - take it - you may not get another offer for a long time.This assumes that you are prepared to do another job - unless you have savings or a short life expectancy - the VR + taking your pension at 55 will probably not be enough to live on (this depends on your personal financial circumstances). With 32 years service you have already qualified for the maximum lump sum of 104 weeks pensionable pay.The first £30,000 of your VR is tax free,so you will pay tax on the remaining £20,000 (there is no National Insurance to pay on VR). Avoid paying 40% tax by not earning more than £41,865 in the tax year 2014 -2015 - this will be £20,000 + what you earn in the year in employment - it might be better to have a holiday before starting work again! Your last day of service (LDOS) will be 12 weeks from the day your official offer is made although I know of this being reduced by agreement.
With regards to taking your pension at 55 wait until a couple of months before and get an estimate if you are still interested (your circumstances may have changed by then) but remember your NRA60 pension (Normal Retirement At 60 pension) will be reduced by 5 years x 5% = 25% and your NRA65 pension reduced by 10 years x 5% = 50%.Remember Royal Mail employs actuaries to calculate these reductions to be to their advantage so I would personally only take an early pension in exceptional circumstances eg ill health,short life expectancy,or debt.
I was very fortunate,taking VR in April of this year after 36 years delivering.

[Pinky 1]

Excellent post N1-22postman

[stroller]

N1-22postman,

A brilliant post buy your good self, I am very torn which way to turn take EVR or not? I don't hate the job I have a decent duty, but the travelling into London seems to be getting harder and I feel tired every day when I get home like most people in the job.

I have always intended to leave at 50 but they moved the goalposts to 55, i would never work full time again that's for sure, if I needed a full time job I would never even think of leaving RM, I will downsize in the next couple of years and lose a chunk if not all of my mortgage so we would need less money coming in.

The only thing that is stopping singing on the dotted line is I have no idea how much I will be offered at 55 and the pension people will not tell you until you are 3 months from your 55th birthday

[RobertT]

The only thing that is stopping singing on the dotted line is I have no idea how much I will be offered at 55 and the pension people will not tell you until you are 3 months from your 55th birthday

Do you have your last pension statement?

Personally I'm a Section C member and assuming your Section B pension statement is similar to mine, simply look at the part headed 'your pension' and take 25% off the NRA60 figure and 50% off the NRA65 figure - assuming you want to take both at 55. That should give you a good rough guide to what you will get.

[stroller]

RobertT

I have turned my place upside down trying to find last years info, but can't find it anywhere