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Early retirement and pensions

E

edfdave

Member
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5
Hi, I have a question relating early retirement and Type 1 Diabetes. I was diagnosed in 1989 when 32 years old and am now 58. My health is probably reasonable for a man of my age with this condition, but it could be a lot better and I’m aware that my control has been variable over the years. Given the higher risk of reduced life expectancy, diabetic complications and realising there is more to life than work, I’ve decided I want to retire from work and concentrate on my health, well being and family. I’m in a final salary pension scheme.

I had been hoping for redundancy as the company I work for has been going through many re-organizations. This would have meant that I could retire early and take my full pension benefits immediately, unreduced. However redundancy currently seems unlikely. My alternative is to resign. I can still take a pension immediately but in this case it will be significantly reduced as the normal retirement age is 63 and I have 5 years to go.

My question is do I have grounds for asking my pension scheme to vary the terms in my case ? In principle I have a lower life expectancy than the norm so it could be argued that the actuarial reduction should be less or perhaps that an earlier ‘normal retirement age’ should apply. I’m not sure what might be possible but I would appreciate advice from anyone else who may have been through this.
 
You'd need to check the terms of your policy and speak to the provider if necessary. Lucky you for being on a final salary pension!
 
Sounds like you need to take professional advice, and it also depends very much on the conditions attached to your final salary pension scheme.

As someone not qualified to advise, I can only suggest stuff.

(1) Money purchase schemes allow you to take impaired life pensions - I'm not sure that final salary schemes allow this as it is purely based on your salary, not the annuity your contributions can buy on the open market.

(2) With a final salary scheme, one option might be to take early retirement on medical grounds - if the company and your doctor can agree that you qualify.

Resigning does not put you in a position of power, and (without being qualified to advise) seems like a last resort.
"I wan't to quit now - can I have more money please?" doesn't sound like an attractive proposition for them.

Google quickly turns up
http://www.moneyobserver.com/our-analysis/pensions-revolution-boost-final-salary-scheme-members
which suggests that you may be able to transfer your final salary value out of your pension scheme and then make use of any impaired life annuities or go with a SIPP which allows you to manage your own money and even leave the residue to your heirs.

You need to talk to a qualified pensions adviser who can advise you on what is possible with the current (and soon to arrive) legislation.

HTH

LGC
 
The rules relating to pensions, per se, change in April, with additional rules relating to certain final salary transfers coming into play. Frankly, it is highly unusual to be best advice to transfer from final salary schemes due to the guarantees included.

As the rules for any ill-health conditions are enforced by the scheme Trustees, and their medical advisors and/or actuaries, an IFA is likely to be of limited value until you have made some enquiries yourself.

Many larger companies (and I'm assuming you work for such an organisation as smaller companies have usually moved from FS schemes due to the lank cheque book nature of their costs) have en Employee Benefits specialist, somewhere in HR who is well versed in the scheme rules and how they may have been interpreted in the past.

My first stop would be to look on the company intranet site and see if you can find a point of reference for enquiries and take it from there.

Failing that, a letter to the Trustees or administrators, marked "Without Prejudice" should get you some info.

Of course if you want to stay under the radar it's trickier, unless you are a line manager who can enquire "on behalf of one of your people". But whatever information you get back would be subject to medical and legal verification, so could only be used for thinking/planning purposes.

To be honest, unless you have existing complications, I wouldn't be too hopeful. Early retirements are actuarially very expensive, unless there are reasons to firmly believe live expectancy will be shortened.

Good luck with it all.
 
Thank you all for the replies. Its given me food for thought. I've already decided I'm stopping work whatever, I just want to maximise the pension if there are any reasonable grounds to do so. I'd thought the main grounds would be that statistically type 1s have a lower life expectancy than others and a monthly pension is based on a 'normal' life expectancy in some way. However as you all say unless I've got immediately life threatening issues (thankfully not) I guess they're unlikely to be interested. I think my best bet will be to informally approach my pension people and ask the question. Thanks again.
 
Whilst T1 doesn't do you any favours, when it comes to large groups, much of that factoring has already been done by the actuaries, usually based on "general populations" to arrive at their figures and the resultant member benefits.

It's a toughie, but if you are determined to stop work early, then you would be best making your enquiries ASAP, so as to maximise on things like service and minimise penalties.

Please do make your enquiries "without prejudice, so that you are not committed to anything before you decide to be.

Finally, in your shoes, I'd be asking for a meeting with my line manager to his/her feelings on potential further restructures. Of course they may not know, or be able to share, but it makes sense to ask anyway.
 
I was just going to add that you should run the numbers to see how much you need to live on once you retire, to see if the deal they offer meets that.

However, if you are going anyway (and I sympathise) this will presumably not change your decision.
 
edfdave said:
Hi, I have a question relating early retirement and Type 1 Diabetes. I was diagnosed in 1989 when 32 years old and am now 58. My health is probably reasonable for a man of my age with this condition, but it could be a lot better and I’m aware that my control has been variable over the years. Given the higher risk of reduced life expectancy, diabetic complications and realising there is more to life than work, I’ve decided I want to retire from work and concentrate on my health, well being and family. I’m in a final salary pension scheme.

I had been hoping for redundancy as the company I work for has been going through many re-organizations. This would have meant that I could retire early and take my full pension benefits immediately, unreduced. However redundancy currently seems unlikely. My alternative is to resign. I can still take a pension immediately but in this case it will be significantly reduced as the normal retirement age is 63 and I have 5 years to go.

My question is do I have grounds for asking my pension scheme to vary the terms in my case ? In principle I have a lower life expectancy than the norm so it could be argued that the actuarial reduction should be less or perhaps that an earlier ‘normal retirement age’ should apply. I’m not sure what might be possible but I would appreciate advice from anyone else who may have been through this.
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I'm guessing from your forum name you work for a certain energy co? Also guessing that you are in the ESPS pension scheme. How many years have you paid in? This will be the main factor in your payments. I was incredibly lucky to have done my 40 years so went at 58. You need to talk to your pensions department and they will give you figures based on how many years you have to go, how many years you've paid in and wether you want to take a higher cash lump sum and lower pension payment or vice versa. Unless your diabetes is causing severe problems I doubt if they would consider I'll health retirement as it means the Co have to pay your remaining g contributions so it costs them dear. I represented a few people who wanted IHR (as a Steward) and it was like trying to get blood from a stone, they would use any excuse to get out of paying. Another thing to consider is when your state pension will kick in. If your're lucky to be born on the right date you might get it at 65 so the lump sum you get needs to be invested to give you some income to top up the work pension. Hope this helps a bit. Of course the other fly in the ointment could be your boss. He would have to agree that you are not indispensible
 
Hi again. That all helps. Thanks. Yes an ESPS scheme. I recently made enquiries about my pension benefits if I leave and take them now, so I know roughly what I'll get. Not a huge but then better than many so it won't stop me going. A bit worried by the idea that "my boss" might not let me go but I know a few people who have resigned to take early retirement recently so I'd be surprised if it was an issue (& they're more indispensable than me). I can accept that there's not really much room in the idea of mentioning the condition. I will try (again) to get a more definitive view on likelihood of redundancy first tho. Cheers. Again.
 
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