Any Pensions experts?

[Laffinalltheway]

My 'normal' retirement date is mid 2029 and I have a projected company pension of £28,500 pa. This would be after 35 years service if I stayed the full term.

Would anyone have any idea what that 28.5K would reduce to if I was to retire in either 2027 or even 2026?

Thanks.

Ask the provider for an illustration or see if there is an online calculator with your provider. It will depend on what it is invested in

Is it a DC or a DB pension? I am assuming DB, is that right? If so, there's no overall answer to this question, it depends on the rules of your scheme. Those rules might also vary for different parts of a long membership. If you are fairly close to your retirement age you shoud be able to get a personal projection so I would contact your pensions administrator to find out how to do this.

You can also look at the rules yourself to get a rough idea. Moneysavingexpert's pension forum is a great place for advice if you are not sure how to do this. But nothing will beat getting your own personal information from the provider.

If you go before your 'due date' there will be an 'actuarial reduction' as you're likely to be drawing it for longer. The only way to find out is to ask your provider.

I think, when I finished in the Civil Service in 2013, the reduction was between 7 and 10% for each year by which the claimant was early. But my memory may be playing tricks and the schemes/rules in the public sector have all changed since then.

It depends what scheme you’re in. I’m in the LGPS & reductions are below.

Thanks for that. Sorry to show my ignorance, but what's a DC and DB? Trying to get info out of the provider, Scottish Widows, is almost impossible since Covid and they're 'working from home'. It's taken me three years to get the above figures of 28.5k...
My HR department and Trustees have been on at them throughout this period and the response has been limited to say the least.
I'll give Moneysavingexpert a go, but if anyone has any other guesstimates, please add.
Thanks again.

No problem at all and sorry for using acronyms.

DB is 'defined benefit' and refers to the kind of pension where you have a guaranteed income each year for life. These are mainly (but not all) public sector and you would then know that you'd be getting that £28.5k every year for life, probably with inflation increases.

DC is 'defined contribution' and refers to the pensions that most private sector employees now have. On this version you build up a pension 'pot' that is invested. If you have this kind then your annual statement will give you an estimate of the annuity that you could buy with your pot when you retire but many people choose to just drawdown some of the pot each year instead. It's possible that you have a DC pension and the '28.5k' is the guesstimate from your annual statement.

The answer to your question about pension reduction will depend on which kind you have. If you have a DB pension then there will usually be a table of 'early retirement factors' that apply to recognise the fact that you will be drawing the pension for longer. The table that LegendsBeyond posted above is a good example of this.

If you have a DC pension then you won't be able to get such a definite answer because it will depend on how your investments do in the meantime and what happens to annuity prices (if that's what you want to do with the money).

I had guessed that you were discussing DB because you were talking about your annual pension rather than the size of your 'pot' but if it is with Scottish Widows that probably suggests it is not.

Thanks all!

I would also suggest getting a Transfer Value from the Trustees - given annuity rates are still pretty low you may be surprised by the value of the pot and it might be worth speaking to an IFA about potentially moving it into a pension drawdown arrangement - that also protects the “pot” after your death as it becomes part of your estate (which DB pensions do not - they may provide all or part for your spouse/partner but once you are gone it is gone

Pension are not part of your estate.

Is it actually an annual income you have been quoted by Scottish Widows or is that your fund value? There are too many variables of what you may get in one or two year’s time to give you an accurate idea but check if it mentions guaranteed annuity rates.