NHS pension lump sum on retirement

brovahelpa

Hi All. I am retiring in 3 months after 40 yrs in the nursing profession. My question, is it better to take the larger lump sum and the smaller monthly amounts. Taking into account the monthly amount will be taxed. I can't decide what to do. It wont be a full pension as i only started paying into it about18yrs ago.
I'd be interested in your thoughts.

EdInvestor

What's your tax position after adding in state pension?

If taking the larger pension pushes you over the 10k or 23k income level you will lose out in extra tax.

What other savings do you already have?

How about your home?

brovahelpa

Thanks EdInvestor. If I take the larger pension my total income for the year will be around 35k including the lump sum, but the lump sum is tax free. My state pension plus earned income adds to around 18k this year.
What do you reckon.

EdInvestor

Sorry, what's the total annual income going to be from the two pensions?And how much is the lump sum (we need to count in the income from some of that too to work out the tax situation).

brovahelpa

The two pensions will add up to about 11k pa. Thats not inluding the lump sum.

jonnyb

when my dad retired from the police, he opted for a bigger lump sum, on the basis that if anything happened to him, my mum would already have that, as she would only receive about half the actual monthly pension if he died.

EdInvestor

brovahelpa wrote: »

The two pensions will add up to about 11k pa. Thats not inluding the lump sum.

Pension income up to £9490 (and this figure will rise to over £10k soon) is tax free for over 65s.So if taking the lump sum would bring you below the 10k level that would be the way to go.Then invest the lump sum in ISAs and other tax free ways so that all your income is free of tax.

brovahelpa

Thanks so much edinvestor. Solves my problem.
Everyone on this forum are just so helpful.

Katykat

Same scenario here, 40 yrs NHS service. I'm electing the larger lump lum & smaller monthly pension. A bird in the hand is better than 2 in the bush as my Granny used to say.