Originally Posted by
Melchett01
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Incidentally, many look at pay in another way if they hit a pension point. Given that from that point on they could leave drawing a pension and start a second career, they are in fact effectively working for a rate of pay equivalent to salary - pension. When people work that one out for the first time you certainly see the cogs turning!
Indeed! As I approached 50, and with the Redundancy Scheme waving in the wind, those calculations proved very interesting. I was not planning for a 2nd career, but instead enjoying the fruits of my earlier labours.
One large spreadsheet later, a couple of salient points emerged:
- Deducting potential pension from current pay meant I was flogging myself at MoD for a pittance (I think it worked out at about £18k pa.)
- My pension income would drop me out of the higher-rate tax bracket, with consequential benefit to tax on the interest earned on substantial savings.
Unsurprisingly, I grabbed the Redundancy money and ran away to the hills, hotly pursued a year or so later by my redundancy-successful wife
