Semi retirement at 55: is my plan doable? Any potential pitfalls you can see? Please advise.

[CrumbsInBed]

Background: mortgage paid off, outgoings not terribly big as we live in a smallish new build. We didn’t have children.

I have both a private and nhs pension. The final projection age is 55 for the private one.

The idea is for me to semi retire, say, to 2 days a week, and draw some of the private pension and leave the nhs pension as it is. Or do I keep the private pension ticking over, and take some of my nhs pension?

I currently work 3 and a half days a week, 30 hours in total.
I have worked for the nhs since 2005, was full time until 2010, then went down to 30 hrs. I am band 2 admin and clerical.
Dh works full time.

Can anybody see any potential problems with this? Any advice would be appreciated.

OP, the new NHS scheme is career average earnings, so whilst your service in the old scheme makes for a good pension, the new one doesn't. It's worse for part-timers.

I also don't think a part-time band 2 post will pay out a pension of 35k pa.

You definitely need a pension advisor.

cash ISAs are currently only of use as a tax shelter. With real inflation well over 3% they lose money.

you are still young enough to ride out the stock market, so consider that.

The thing to remember about your NHS pension is that it is also a life insurance policy so your husband will get two times your pensionable pay if you died in service as well as a pension on death (there would be a pension on death of you took early retirement of course but if is enhanced if you die in service). Sorry horrible things to think about but I'm guessing your private pension won't offer you these things.

How much reduction is your private giving you because you are taking it early?

It's been a while since I was a pensions officer for the NHS so not as up on the rules but many pensions allow flexible retirement so you drawdown some of your pension while still remaining in the scheme and contributing - in fact I know the NHS did something like this. I think you had to reduce your pay by 10% and could get up to 75%? It's worth looking into.

You must have been paying in an enormous amount to your private pension to get 35K pa. I pay 500pm into an AVC and am only projected 8K per year after around 20 years. Are you sure that's not your total pension pot? If so, it will only pay you around 2.5K pa. You might be better paying more into pensions than savings (tax efficient)

If you reduce to 20 hrs, your pension will be slightly more than 1/2 of a wte. In the NHS this means they will credit you with 1/2 a year over the whole tax year (proportionately). Rather than reduce hours, it might be better to retire, defer pension then work bank.

It's complicated but look at the NHS choices pension forecast website.

Sorry meant to add, whilst NHS scheme is good, it may not be paying out as much as you anticipate! I have worked 35 years, (some part time, so only part time credits), currently Band 7 and looking at less than 20k pa at 60. You really need some professional advice.

Find an independent adviser who can do some cash flow modelling for you, projecting realistically what your pensions and other investments can provide in the way of income, and what your outgoings may be, including building in inflation.

They should also be able to model worst case scenarios - eg if there was a stockmarket crash your private pension fund might have a significant drop in value, which would see the income you could draw from it reduce.

Expenditure will be key. As a PP said, you may be able to cut back on expenditure when you semi/fully retire (or you may want to spend more, to travel etc) but in later life you may need to spend more on help in the house/garden/care etc.

Also think about inheritance - you mention you do not have children.. Therefore you may be happy to spend all/most of your liquid assets (leaving a margin for safety) or also use an equity release scheme if necessary to access funds tied up in the value of your house.

How long do you expect to live? A good cash flow model will project to at least 90 and to 100 or beyond.

I have recently had a meeting with our Trust’s pensions person. She advised that if I decide to continue working beyond pension age ( 60 for me) I would not be able to draw on my NHS pension while working, if I was working for the NHS. If I continued working in a different sector, then I could.