SPVA Forecast
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SPVA Forecast
Ladies/Gents, for those of you that have recently left how accurate was your pension forecast? I have recently received mine and it is pleasantly better than the Calculator was predicting. Thanks.
Join Date: May 2003
Location: No longer where I used to be: I've escaped!!
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More than expected
I suspect that you have been 'dynamised' !! ( search under BMA GP pensions).
As you have not received a pay rise for several years, your pension would be worth less than one of your colleagues who retired prior to the pay freeze, but whose pension has increased by the annual CPI rate thus disadvantaging you for the extra years you have served. In effect your frozen salary is 'dynamised' up by the CPI increases since the pay freeze and that bigger 'dynamised' salary is the basis for the calculation of your pension. The calculator is unable to show this as I believe it to be a manual calculation by the gnomes at Glasgow.
Future increases of your pension will be subject to CPI.
CNN
As you have not received a pay rise for several years, your pension would be worth less than one of your colleagues who retired prior to the pay freeze, but whose pension has increased by the annual CPI rate thus disadvantaging you for the extra years you have served. In effect your frozen salary is 'dynamised' up by the CPI increases since the pay freeze and that bigger 'dynamised' salary is the basis for the calculation of your pension. The calculator is unable to show this as I believe it to be a manual calculation by the gnomes at Glasgow.
Future increases of your pension will be subject to CPI.
CNN
Capt N N has it in one.
The effect of "dynamising" on my pension calculation gives about an 8% increase as compared to the 'basic' calculation of simply time served vs current salary, largely because for one of my last 3 years in service the CPI figure was 5%.
The concept of "dynamising" for AFPS05 still seems to be relatively unknown out there, at least among my colleagues, despite a recent article on it by the Forces Pension Society. Indeed it wasn't mentioned in my resettlement pensions brief by the 'expert' at all.
Just another one of things that actually made AFPS05 a great pension scheme!
There's a brief explanation at the bottom of the page reached on following this link:
Dictionary UK | divorce, discretionary benefits, dual membership
The effect of "dynamising" on my pension calculation gives about an 8% increase as compared to the 'basic' calculation of simply time served vs current salary, largely because for one of my last 3 years in service the CPI figure was 5%.
The concept of "dynamising" for AFPS05 still seems to be relatively unknown out there, at least among my colleagues, despite a recent article on it by the Forces Pension Society. Indeed it wasn't mentioned in my resettlement pensions brief by the 'expert' at all.
Just another one of things that actually made AFPS05 a great pension scheme!
There's a brief explanation at the bottom of the page reached on following this link:
Dictionary UK | divorce, discretionary benefits, dual membership
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Gratuity on 75 was about 3k better than the pensions calculator, exiting on PVR just after 16 point and after 2015.
I'm guessing you have been on top level for a while? I was still on an increasing rate and the calculator assumes that the level you put in is what you have been on for the previous 365 days. If you have been on top level for a while it should be more accurate (I think).
Have you looked at leaving at your 55 point vs leaving early and the long term benefits? (Or are you already past your 55 point?)
Have you looked at leaving at your 55 point vs leaving early and the long term benefits? (Or are you already past your 55 point?)
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I am told by Manning that a lot of 54 years olds are PVRing, so the pre 55 option is being subscribed to by SP.
However I cannot see how the decision can be so easy unless you are assured of a job after the military. Likewise; unless I am missing a trick, the 'equation' cannot take into account longevity in life. Broad estimates of mine reckon that leaving early is good if you are getting another job or likely to die before the age of 85.
If you want to put your feet up and live beyond 85 I reckon the advantages of leaving days or weeks early are diluted. I tackled an expert on this matter recently and he could see my point and did not have a robust answer to it.
However I cannot see how the decision can be so easy unless you are assured of a job after the military. Likewise; unless I am missing a trick, the 'equation' cannot take into account longevity in life. Broad estimates of mine reckon that leaving early is good if you are getting another job or likely to die before the age of 85.
If you want to put your feet up and live beyond 85 I reckon the advantages of leaving days or weeks early are diluted. I tackled an expert on this matter recently and he could see my point and did not have a robust answer to it.
Top level PAS guys. If you intend to work beyond 55, leaving a few days before your 55th birthday makes a lot of sense. It will reduce your pension by about £10000 pa....which means that you'll only lose £5800ish after tax and NI. That's£58000 over ten years. In return you get another £110k gratuity at 65. Assuming inflation is 3% that means it's true value when you receive it will be about £80000. So that's just over £20000 extra in your pocket if you live to be 65. And thereafter the benefits increase over the guy who stayed to 55 because you can generate an extra £4000 a year from your additional gratuity.
For the less well paid it will still work if your post-retirement income takes you well into the 40% tax bracket.
For the less well paid it will still work if your post-retirement income takes you well into the 40% tax bracket.
Couple of points Kintyred, which make it even better than you described.
Even if you are not going to be a 40% taxpayer it works out more lucrative to leave early (on AFPS05). In fact even the gross figures are better. The second gratuity is also payable on death so if you don't make it to 65 you still get the money - well someone gets it. And the pension lump sum at 65 is index linked.
Do be careful though if you're interested in FTRS service as you would have to pay back some or all of the first gratuity and you would get no annual income (aka 'pension'). If you intend to FTRS leave at 55.
Even if you are not going to be a 40% taxpayer it works out more lucrative to leave early (on AFPS05). In fact even the gross figures are better. The second gratuity is also payable on death so if you don't make it to 65 you still get the money - well someone gets it. And the pension lump sum at 65 is index linked.
Do be careful though if you're interested in FTRS service as you would have to pay back some or all of the first gratuity and you would get no annual income (aka 'pension'). If you intend to FTRS leave at 55.
Well, thank you BN, my wife will be extra chuffed if I shuffle off this mortal coil early! Are you sure about the second gratuity being index-linked?
On a personal note, wild horses wouldn't drag me to FTRS. It strikes me as getting personnel on the cheap by taking part of your pension away....no other employer would do that.
On a personal note, wild horses wouldn't drag me to FTRS. It strikes me as getting personnel on the cheap by taking part of your pension away....no other employer would do that.
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The second gratuity at age 65 is definitely index linked. This was confirmed by David Marsh of the Forces Pension Society at one of my resettlement briefs recently. The eventual `pension`, which will be payable at age 65 once your EDPs stop, is also protected from inflation between when you leave the Forces and when it becomes payable so will be worth the same in real terms as your actual written forecast from SPVA.
It has been mathematically proven that it is DEFINITELY advantagous to leave early under AFPS05; especially if you do get another job and are a 40% tax payer. Also be aware that NICs are NOT payable on your EDP payments if you leave early.
It has been mathematically proven that it is DEFINITELY advantagous to leave early under AFPS05; especially if you do get another job and are a 40% tax payer. Also be aware that NICs are NOT payable on your EDP payments if you leave early.
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kintyred
You really have to be very careful before making sweeping assumptions like you have done in your last couple of posts. Everything depends on personal circumstances. For example, you state:
"If you intend to work beyond 55, leaving a few days before your 55th birthday makes a lot of sense. It will reduce your pension by about £10000 pa....which means that you'll only lose £5800ish after tax and NI. That's£58000 over ten years."
But what if you reinvest that £10000 a year into another pension fund? That would be tax free and potentially grow at 8 to 10% a year - even today. After 10 years that would be worth more than your £110k gratuity at age 65.
My advice would be to think hard and maybe seek individual advice - don't just follow the flow.
You really have to be very careful before making sweeping assumptions like you have done in your last couple of posts. Everything depends on personal circumstances. For example, you state:
"If you intend to work beyond 55, leaving a few days before your 55th birthday makes a lot of sense. It will reduce your pension by about £10000 pa....which means that you'll only lose £5800ish after tax and NI. That's£58000 over ten years."
But what if you reinvest that £10000 a year into another pension fund? That would be tax free and potentially grow at 8 to 10% a year - even today. After 10 years that would be worth more than your £110k gratuity at age 65.
My advice would be to think hard and maybe seek individual advice - don't just follow the flow.
LFFC,
You get the same gratuity at 55 that you can invest in a pension fund whether you leave a few days early or not anyway. I'm assuming AFPS05 for people in this position since anyone intending to stay until so close to their NRD has almost certainly chosen to opt for this scheme because it's so much better than than APFS75...sorry to make another sweeping assumption!
You get the same gratuity at 55 that you can invest in a pension fund whether you leave a few days early or not anyway. I'm assuming AFPS05 for people in this position since anyone intending to stay until so close to their NRD has almost certainly chosen to opt for this scheme because it's so much better than than APFS75...sorry to make another sweeping assumption!