PCSPS Voluntary Redundancy Offer - re-invest in Pension Pot?

Sanddunelass

Hi,

Looking for any advice on taking up voluntary redundancy specifically what to do with the lump sum which would be payable jan 2012, if i accept.

I am 39, unmarried but living with partner (employed), one dependant, mortgage 79K and offer on table of 48K. 7K p.a pension and lump sum three time this payable at 60.

If i go ahead with the offer, should i plough all or some of the cash back into my pension (the old 'classic' PCSPS scheme) where i can buy added pension which i would receive at age 60, index linked.

Would my money work harder by doing this rather than the current 3% rate on offer in a savings account. I also benefit by an increased lump sum of 3 times whatever my annual pension increase is and i would not pay tax if i put 18K cash into my pension. I believe 30K is tax free and i have a personal allowance unused for 2011-2012.

How do i calculate the return on my money if say i paid 43K for an extra 4K a year pension, increasing with inflation and the lump sum increase of 3 times the increase?

The classic scheme is now closed to new entrants and it would be my last opportunity to increase my pension pot in this scheme under our accrued rights. Very soon this scheme will be scrapped for something cheaper.

Or should i reduce the mortgage (0.5 % plus base rate) which i realise is a good rate so probably not worth it. I have an offset account.

I spoke to a financial advisor on the phone (free initial meeting through union) but he seemed only interested in meeting me if i was willing to put my money into 'investments'.

I am on a career break and was not planning to return to work for at least another year.

Has anyone got any advice for me please? Very much appreciated.

getmore4less

You need specialist advice from someone that understands the pension scheme.

The tax benifit going in are marginal since there will only be 20% tax on £10525.

There is a penions board
http://forums.moneysavingexpert.com/forumdisplay.php?f=19


No point in paying off the mortgage with te money but it might be worth keeping it in hand in case rates rise and afforability becomes an issue.

Sanddunelass

Getmore4less - thank you for your comments. I will seek the specialist advice you suggest, and will certainly bear in mind keeping the money accessible for when rates rise should affordability become an issue. I'm glad you mentioned that. I will also check out the pension forum, many thanks for the link.

blossomhill_2

Please see PM