nhs pension

duetoretire

I am a 58yr old nurse thinking of taking early retirement from the NHS, who has been my employer since 1973. I would like advice on how to divide my pension pot, should I take the largest lump sum/small pension or smallest lump sum and largest pension in the present economic situation?

dunstonh

I would like advice on how to divide my pension pot, should I take the largest lump sum/small pension or smallest lump sum and largest pension in the present economic situation?

The present economic situation is largely irrelevent. In your remaning lifetime you will probably see another 1 or 2 recessions. YOu have a few economic cycles left in you yet (hopefully).

More important is your financial situation, taxation, spouse requirements/provision, objectives in retirement, health etc. They need to be known before deciding which option is best overall.

atush

Basically, what other savings and investments do you have, house, mtg, spouse etc.

If you have other savings, I suspect taking max pension will be a good idea.

Katykat

Bear in mind that the lump sum ( max 25% of the total ) is tax free. The annual pension is not. Personally when I retired from the NHS, I took the max lump sum. That way, 25 % of my pension was in my bank immediately. If I'd taken no lump sum and max pension, and I had died soon after, my OH would have only received half my monthly pension. And when he died, my pension would die too. As it is now, if this scenario happened, my children would inherit the lump sum as its part of my estate.

xylophone

The lump sum is tax free but any income arising on it isn't unless it is invested in tax free products or the individual is a non-taxpayer.

dunstonh

If I'd taken no lump sum and max pension, and I had died soon after, my OH would have only received half my monthly pension.

One scenario that needs to be considered. Hence my reference to health and spouse provision. Also, with many defined benefit schemes, if the surviving spouse remarries, the pension stops.

oldtoolie

I found it useful to compare the difference between the two choices.

To take the larger lump sum and the lower pension, I would have to invest the extra cash at 8.3% to make up for the lost income.

I'm not that shrewd an investor. So bigger pension it is.

Most people would be pleased to be offered an annuity paying 8.3%.

bigfreddiel

i'm in the cs classic scheme - my lump sum is £25k - the inverse commuation factor for me at 60 is 5% - i'm taking it - you can't get a pla (even an enhanced one) index linked and 50% to spouse at that rate - I have other savings in isas,ilscs and so on so i don't need the lump sum.

hope that helps