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If you saw a copy of this year’s summer DC FYI magazine, you might have seen our interview with
Fran Morrison, a retired member of the Defined Benefit Section who made Defined Contribution
Additional Voluntary Contributions (AVCs).
In this edition of FYI we talk to Nick Boham and Linda Drake, a couple who chose to retire at the same time in the
summer of 2012. Between them they have around 72 years’ service at BAT – an impressive record! Nick finished his
career as a Principal Scientist working in Research and Development in the Science and Regulation department in
Southampton; Linda worked in the analytical department managing laboratories, then moved to the Science and
Regulation department and just before retiring was responsible for managing the BAT science website.
My road to retirement – and beyond!
When you were a BAT employee did you have
a plan in place to save for retirement?
Nick:
We planned to retire at the same time, when I was 60
and Linda was 55. Towards the end, the salaries were
good, the years of service we had built up were good
and we were reasonably happy with what we were
going to get (especially as there were other elements
such as shares to take into account).
Linda:
We wanted to be able to retire without our pensions
being reduced for early retirement – for me, retiring five
years early could have meant a significant reduction in
the amount of pension I received. I gave the Company
14 months’ notice of my intentions and fortunately the
Company agreed that I could retire early without being
affected. I might have reconsidered early retirement if a
reduction had been applied.
Did you have any concerns or worries about
your pension?
Nick:
The closer I got to retirement, the happier I was with
the pension I was due to receive. I didn’t pay AVCs
because at the time there were limits on the amount
you could receive as a pension, as a proportion of
salary. I did make sure that I was on track to have
enough in retirement to be comfortable though.
Do you remember the process leading up to
retirement?
What did you use to keep track of your
pension?
Nick:
We were aware of the pension we were likely to
receive when we retired because we have a good
understanding of how Defined Benefit pensions work
and we could calculate our pension based on years of
service and our salaries.
I used the ‘Plan-it’ tool to check what my basic
expenditure might be in retirement, to make sure my
pension would be enough. I was fairly confident that I
would be okay.
Linda:
The BAT Pensions Administration Team was very
helpful when I called as I had to go through the
process of applying to retire before the age of 60.
They sent me a projection of the pension I could
receive if I chose to retire at age 55. I found I only took
note of the benefit statements when I got close to
retirement, but I did find them useful as an estimate of
what we might get.
‘We are making some changes to our seminar programme
later this year. The frequency of our ‘Managing Your
Pension’ seminar has increased and will replace the
seminar for new joiners. It is a great overview of the basics
of the Fund that is suitable for everyone.
We will soon be rolling out our new ‘Approaching Your
Retirement’ seminar that is designed for members who
are within ten years of retirement. It is aimed at DC
members and DB members that pay AVCs, so if you are
an AVC payer this session will help you to find out about
the options available to you at retirement.’
Michael Groves, Pensions Administration Manager
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Do you remember the process leading up to
retirement?
Nick:
Our story is a rosy story! We both retired on the Friday
and received our first pension instalment on the
Saturday morning! I know that sometimes there can
be a delay in retiring and receiving your first pension
payment, but we planned early and the timing worked
out so we didn’t have to wait for our pension. My advice
to anyone is plan well ahead and let the Company know
what your plans are.
‘If you understand what your expenses are likely to be
in retirement you will be able to plan ahead to target
the right level of income. Visit our ‘Plan-it’ tool to help
you work out what you may need to budget for after
you retire.’
Dzung Bale, Pensions Project Manager
Did you have a good understanding of State
Pensions?
Linda:
I am one of the people affected by the increase in State
Pension Age, so I receive my State Pension when I am
66, which is in ten years’ time. I was aware that there
would be a gap, but I still have to be good at managing
my money as obviously my income is less than I was
receiving as a BAT employee.
Nick:
While I was working I calculated roughly what I could
receive in State Additional Pension until it started to
appear on the annual benefit statements, which
I found very helpful.
Do you have any advice for members that have
yet to retire?
Nick:
I attended the pre-retirement course in Winchester and
the seminar in Southampton. Both were very good
and I learned a lot. I also found it reassuring so I would
recommend it to members.
Linda:
I agree – Michael Groves, the Pensions Administration
Manager, presented the Southampton pre-retirement
seminar that I attended – it was a good insight into what
I could expect. It was good for me that Nick was on the
course as well, as we could support each other and make
sure we asked all the necessary questions.
How do you manage your finances in
retirement?
Linda:
I’m not a saver by nature, so I took advantage of the
opportunity to take 25% of my pension as a tax free lump
sum. I find that the biggest difference for me, although
other people say it isn’t, is the financial side following
retirement and I have to curb my spending a bit especially
as I am a shopper.
I’m looking forward to when I begin to receive the State
Pension as that will be a welcome bonus.
Nick:
I remember in the retirement seminar something that
Michael Groves told us: the number one concern for
people approaching retirement is money, and how they
will manage. After retirement, it normally doesn’t even
feature in the top ten!
The Fund is one of the top pension schemes in the
country and there are not many people just starting out
in their careers now who will receive as good a pension
as I do.
What do you enjoy most about retirement?
Linda:
One good piece of advice from the retirement seminars
was to ‘do all the physical things first’, so I’ve been
spending a lot of time working in the garden, which
can be quite physically exhausting! I miss seeing my
colleagues as I am very much a people person; I keep in
touch with a lot of them and meet them regularly.
I found that the summer was a good time to retire, both
from a financial perspective and because it is a big step
to take, so the weather helps, especially in the garden!
Nick:
We keep very busy. I always knew I wouldn’t be bored
when I retired – now I don’t know how I found enough
time to work!
Neither the Trustees nor the Company are able to give financial advice about your options at
retirement. We recommend that you obtain independent financial advice; you are responsible for
obtaining your own advice and you can find an adviser in your area at
