Pension lump sum to take or not
Options
Comments
-
getting conflicting advice on what to do.
That is because it is not clear cut any more. Rules changed in 2006. So, some people may still be thinking of pre 2006 rules. Whilst others may be thinking post 2006. Post 2006 made it less likely to have maximum tax free cash being the best option when you only look at the terms. However, when you start to factor in spouse benefits, dependants, capital availability, taxation, health or even "a bird in the hand" you soon realise that it is more of a personal decision.
If anyone has told you that one option is bad and the other is good without knowing your circumstances, then chances are they dont know what they are talking about. So, eliminate them from your research.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
It's like insurance, life insurance sells well but only a few actually need it.
You're buying peace of mind, a secure, increasing income in old age or loadsamoney now.
You pays your money and takes your choice.The only thing that is constant is change.0 -
my husband will be taking early retirement (at 60) in march and his maximum lump sum with final salary pension reduced. the commutation rate, at 17.04, seemed average (12:1 being bad, and 22:1 good)
this is because we want to spend more in our early years of retirement but with sp and fs pensions each, we will still be ok in later life.
we are even more grateful for this lump sum now as i have just been diagnosed with malignant melanoma so my future is somewhat uncertain at the moment. you never know whats round the corner as they say.
it is a balancing act between purely financial and personal circumstances i think.0 -
My wife and I have been kicking this dilemma about for 9 months “lump sum” or “larger pension” and weighed up all our options, spoke to banks, IFA’s, read this that and the other and in honesty we kept coming back to the same old conclusion, how long do we live?
here was our situation at teh end of 2011
· Mortgage already paid off some 12 years ago
· Both still working and relatively fit, thankfully
· I’m 61 and she 62
· We have over £100000 savings
· The posts above cover most other reasons etc.
· Both eligible for State Pension (wife already receiving me at 65)
Last weekend we grasped the nettle and signed the papers opting for lump sum.
Break down as follows
Lump sum £115K
Reduced pension about £18K p/a
I die wife receives almost £14K p/a
Do you know why we took this path,
if I die first my wife of 40 years should be OK financially as well as an insurance pay out of about £50k if either of us go before 70.
We don’t care how daft this seems to some but it’s what we decided and more importantly we are comfortable with the decision.
Good luck to the OP because it’s not easy trying to muddle through it.0 -
I think it's actually quite simple.
If we remove the £'s and %'s we can summarise quite easily:
Like most things in life, the longer you wait, the more you'll get - clearly taking a lump out of your pension will ultimately leave you worse off.
So, do you need/want a lump sum of money now?
If you can happily live without the lump sum - go for the long term gain.
If you need the money to pay something off before you retire or you want to splash out on a new car / holiday (perfectly acceptable to splurge at this point in your life) - go for the lump sum0
This discussion has been closed.
Categories
- All Categories
- 343.5K Banking & Borrowing
- 250.2K Reduce Debt & Boost Income
- 449.9K Spending & Discounts
- 235.6K Work, Benefits & Business
- 608.6K Mortgages, Homes & Bills
- 173.2K Life & Family
- 248.2K Travel & Transport
- 1.5M Hobbies & Leisure
- 15.9K Discuss & Feedback
- 15.1K Coronavirus Support Boards