Medical Retiral

bigbigmamamoo

I am happy to be able to finally say that I have been approved for a total incapacity pension.

The bad news of course is that this has happened because I am disabled and unwell.

The good news is that the terms and conditions of my pension are very favourable compared to many others.

So what is my problem? I've been given the forms to fill in and after looking at this for a long time getting advice from two financial advisers, talking to my family, I've decided that taking the maximum lump sum is the best option for me, but I'm still hesitating.

I'm worried because my illness has caused some cognitive problems and I know I'm just not as smart as I used to be

On the plus side of my decision are the following

the commutation factor is 22
the maximum lump sum is equal to what I owe on my mortgage and I have an offset mortgage, so can put the cash in there and not pay any interest, unless I need acces to some of the cash in and emergancy
the monthly pension payment is sufficient for me to live on and it is index linked (to whatever the government uses for public sector pension)

Are there other factors I need to consider, before I take the plunge and make this decision?

Loughton_Monkey

As far as I can see, you have done the 'right' thing.

You have not said anything about partners or dependents etc. If your 'cognitave' problems are to worsten, then you must urgently consider setting up a lasting power of attorney. This is something that you do now while you have the ability to do so. The day after you have done it, absolutely nothing changes. But much longer down the road, it remains 'there' to be 'switched on' when necessary. The only alternative with it is a rather complex and lengthy 'Court of Protection' order at the time. That can be extremely messy and cause loads of problems for quite some time.

My only other observation is that 'Offsetting' your mortgage is brilliant. As you know, you have all the advantages of (a) effectively mortgage is paid off, and (b) you do have access to the capital in an emergency.

However, the 'flaw' in that argument is that if you dip into the offset cash, then it must - at some point - be replaced. Hence if you do not have any other 'savings' to fall back on, I think you will need to ensure that you achieve a 'surplus' from your reduced pension, so that you can build up an 'emergency fund' ready for the time at which the mortgage needs to be paid off finally.

bigbigmamamoo

Loughton Monkey, thanks for your quick response.
Dependents: none, I'm divorced with two grown up daughters
Power of Att: yes now is the time to take care of this
Surplus income: The monthly income is sufficient to meet my current basic expenses with a little left over, but as I become more disabled my expenses will go up. I have some fairly expensive items I want to buy that are not strictly necessary to improve my quality of life (wheelchair handcycle, wheelchair motortrike etc). And so I am thinking I will put the surplus towards those and then start saving. I am hoping that I will have built up some savings before I become more disabled and need to spend more on my care needs
At some point I need to make plans for a possible move to a care home
Thanks again

Loughton_Monkey

I am not sure, but there may be 'ways' to protect your house value so that it is not spent on care costs. However, I am personally not up to speed on this. Others may comment and it may indeed not be feasible in your circumstances. I just don't know.

cyclonebri1

Loughton_Monkey wrote: »

I am not sure, but there may be 'ways' to protect your house value so that it is not spent on care costs. However, I am personally not up to speed on this. Others may comment and it may indeed not be feasible in your circumstances. I just don't know.

Sound couple of posts LM. sure the op appreciates them :T:T