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Civil Service voluntary exit scheme - which option, HELP!

I am taking a voluntary exit package from the Civil Service aged 51 and would like some guidance on my options.

They are all payable now.

Option 1 - Take full pension
Full pension £8174
Pension lump sum £24522
Forgo exit compensation of £40101
(Employer pays top-up cost of £25877 to give full pension figure)

Option 2 - Take actuarially reduced pension
Reduced pension £5157
Reduced lump sum £17974
Get exit compensation £40101

Option 3 Commute pension lump sum
Reduced pension £6568
Get extra lump sum £43789
Forgo exit compensation £40101

Exit compensation is taxable over £30000.
Will also get carers allowance of £58 per week (before tax) for husband who is disabled.

Which of these options would be the most beneficial in the long term?

Any remarks gratefully received.:eek:
«1

Comments

  • lincroft1710
    lincroft1710 Posts: 18,977 Forumite
    Part of the Furniture 10,000 Posts Photogenic Name Dropper
    What are your current annual outgoings?

    I took early retirement from CS about 6 years ago on a higher pension than yours and unless mortgage has been paid off or is low, the pension isn't as generous as non CS would believe.
    If you are querying your Council Tax band would you please state whether you are in England, Scotland or Wales
  • BINGO
    BINGO Posts: 5 Forumite
    Thank you for the warning! Undoubtadly some adjusting to do, but thankfully no mortgage.:)
  • getmore4less
    getmore4less Posts: 46,882 Forumite
    Part of the Furniture 10,000 Posts Name Dropper I've helped Parliament
    Unless there is a need for the money or life expectancy is poor, the commutation rates are not so good(10.5-12) making the pension the better option given the age.

    Are there any changes to the pension when the state kicks in?
    Do you have the 30y contributions for the state pension?
  • lincroft1710
    lincroft1710 Posts: 18,977 Forumite
    Part of the Furniture 10,000 Posts Photogenic Name Dropper
    edited 22 January 2012 at 7:52PM
    Looking at it cash wise, over next 20 years:

    Option 1 actually gives you £9,400 p.a. plus diminishing interest, if you invest the £24,522 and take out 5% p.a.

    Option 2 £7,750 p.a. plus diminishing interest if you invest the £52K (after tax) and take out 5% p.a. (depends if tax is on whole £40K or just that over £30K

    Option 3 £8750 p.a. plus diminishing interest, if you invest the £43,789 and take out 5% p.a.

    These figures are approx and I would advise you to check them, in case I've made a mistake.

    I don't want to be morbid, but if you expect to live for a long time then you need the biggest pension. If you want/need cash now and can live on a smaller pension, then Option 3 otherwise Option 1 is best overall.
    If you are querying your Council Tax band would you please state whether you are in England, Scotland or Wales
  • firesidemaid
    firesidemaid Posts: 2,136 Forumite
    Part of the Furniture Name Dropper Combo Breaker Bake Off Boss!
    also i think (sorry if i'm wrong) that you can only earn a certain amount whilst being in receipt of carer's allowance.
  • Is there a missing option here, one where you can defer taking your pension and lump sum until age 60 and try to live off the compensation (£30K tax free and £10k taxable) + and carer's allowance? Sorry if you have already considered it and ruled it out, but that one would mean that you could try living on a reduced amount in prep for pension days, but at any time during the 9 years, ask to take the pension early.

    Say you could manage for 5 years, the actuarily reduced pension amount would be reduced by less than an actuarily reduced amount taken now
    You never know how far-reaching something good, that you may do or say today, may affect the lives of others tomorrow
  • also i think (sorry if i'm wrong) that you can only earn a certain amount whilst being in receipt of carer's allowance.

    Yes that's right but private pension is not earnings. The only earnings would be from a job. So claiming carer's allowance is fine with a private pension as in non-means tested but is taxable.
  • BINGO
    BINGO Posts: 5 Forumite
    no changes to the pension when state pension kicks in, also have full 30 yr contributions to state, so no problems obtaining full state pension
  • BINGO
    BINGO Posts: 5 Forumite
    also i think (sorry if i'm wrong) that you can only earn a certain amount whilst being in receipt of carer's allowance.

    checked with benefits people and cares allowance can still be paid with occ. pension, but thankyou for highlighting that.
  • BINGO
    BINGO Posts: 5 Forumite
    Is there a missing option here, one where you can defer taking your pension and lump sum until age 60 and try to live off the compensation (£30K tax free and £10k taxable) + and carer's allowance? Sorry if you have already considered it and ruled it out, but that one would mean that you could try living on a reduced amount in prep for pension days, but at any time during the 9 years, ask to take the pension early.

    Say you could manage for 5 years, the actuarily reduced pension amount would be reduced by less than an actuarily reduced amount taken now

    this is definitely something I need to look into - it was not given to me in the paperwork, but if that is a possiblity then I would also be able to get some reduced lumpsum pension at the same time as the reduced pension?
    many thanks for spotting the possibility.!:T
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