Pension Break Question

[oilypaws]

Can you elaborate further? I'm confused that they said you had done the "full 30"
Was it a mistake by payroll and you hadn't done 30 years?

Yes it was a big mistake by Central payroll, 12 months too early, which then started some research by myself and our “local” payroll section.
You can be in the 92 scheme for more than 30 years, they thought you couldn’t be.
While you can’t accrue more than 40/60ths, the level the 40/60ths is calculated is dependent on level of contribution, and still being in the scheme, if you come out of it, it relates to whatever date you stop paying into it, you also lose access to certain other benefits. The pension holiday/stopping paying “cause ye’ve done the 30” question isn’t something to be taken lightly.
These are individual decisions, related to personal circumstances.

[Lou1z]

the level the 40/60ths is calculated is dependent on level of contribution

Do you mean the salary that you finish on? I'm not quite following you at the moment. Can you give an example?

My understanding is that you pay into the scheme until you reach 40/60ths and then there's no point in contributing afterwards as there is no benefit to be had.

Also, my understanding is it's not dependent upon the level of contributions, hence why there is the split pension option which prevents somebody who has contributed more at some stage and isn't contributing as much at the "best of the last 3 years point"

[oilypaws]

Use the mythical big pay rise that’s floating about
30 years done, (wage 30k) but staying on, come out of the pension... pension calculated on 30k

30 years done....(wages go up to 35k) stay in, yes still making contributions of 14.7% a month
No more than 40/60th benefits accrued

Time of year is apparently a factor to consider, along with other individual financial needs...

[pablo]

I understand that oilypaws but surely the saving £450/500 a month is better than the big mythical payrise?

[noisycat]

Doesn’t the return factor decrease the older you get on your lump sum ? Which is something else, you may have to consider.

[Lou1z]

Going on that then:
1. What happens to the extra contributions you pay? eg you pay 2 extra years? Is that returned or wrote off? I can't imagine them writing it off as the club 18-20 saw that issue dealt with.
2. Lets pretend they do refund it for a minute. Do they refund it at the rate you payed this end (as you are trying to increase your pension by the current payrate) or do they refund it from the other end ie what you payed 30 years ago.
3. Is your lump sump commutation factor then recalculated at the point you have chosen to retire? As mentioned, going at 54 years old is not the same as going at 52 years old.

[oilypaws]

18-20 was different

Way it was explained to me you want to be in the club for two years more, it’s the cost of membership, the commutation factors are down to the individuals circumstances

Why would you get a refund if you were staying in to get the increased pension and lump sum?

And I stress again it’s down to individual circumstances.

[Lou1z]

Ok, I'm not sure if (for instance) 2 extra years contributions would be worth it? Would the commutation factor be worked out at the point the retire or the point they would have retired?
Over a 2 year period, you would contribute approx £9-10k, your commutation factor would have dropped considerably too. So I think it would take a bit of a pay increase to recoup that over x amount of years.

With regards a refund, I would have thought anybody who contributed more than the usual 40/60ths would get a refund. The 18-20 club could have effectively contributed 42/60ths ie they payed into it for 32 years rather than the max 30 years for no extra benefit.

You would in this instance, effectively be paying more than 30 years. Sounds a bit strange to me ie they take your money just so you can retire on £31k instead of £30k

[pablo]

So going at 50 you would have the max commutation factor and a pension break in the 2 previous years.
Going at 55 your commutation factor will be lowered plus you are still making contributions and there’s a doubt about the date they use for the pension calcs?
As you said everyone is different but I know which one I would take.

[omegaman]

It's up to you if you keep paying after 30 years, if you decide to keep paying you keep the final salary link at point of retirement. If you opt out you get the salary at point of stopping your contributions ie 30yrs. Commutation factor is aged based at point of retirement. If a mythical big rise happens your best stopping in let's say 10% rise this will be 2k in your pension for life at a cost of about 10k over the 2 yrs extra you will have to do. Sounds like a good deal to me. If pay rises are small say 2% that's 400 for the rest of your life for for 10k not such a good deal.