Final Salary Pension, maximum pension or lump sum

[Deleted User]

Don't know if this just clouds the issue or not, but if the amount of annual pension that you are considering giving up is money that's above the tax threshold, you are not giving up £100 for £1200 lump sum. The £100 is subject to 20% tax, so I think you would give up £80 "take home" pension. I am looking at the same question and can't make my mind up either!

WR

mania112

is the fixed amount half of what it says you will get?

or it might say N / 160 (for an 80ths plan) which is also the same as saying 50%

Party_Animal

mania112 wrote: »

is the fixed amount half of what it says you will get?

or it might say N / 160 (for an 80ths plan) which is also the same as saying 50%

Thanks for that. Its not half, round about half of a sum in between the highest and lowest annual pension figures, but the widow's pension is the same whether I convert some of the pension or not. It says (Based on Widow's membership of 21/363)
Thanks

999

I think it must be the norm, at least in public sector pensions, that the widows pension is fixed. Mine is civil service and it was the same. About 40% of possible maximum pension I seem to recall but may be wrong.

To help decide what amount of pension / lump sum to take I found it helpful to use one of the online tax calculators such as http://www.listentotaxman.com/index.php to see what the actual net income will be from the pension. I preferred this one as it has an option to remove NI which is not payable on pensions.

NAR

Party Animal you need to look at what you will NEED to get by every month, if your reduced pension and wife's pension is enough, then take the bigger lump sum. No one knows how long they will live, or even live in good health, so spend, spend spend over the next ten years and give yourself lots of happy memories. That's what I intend to do this time next year.

You also have the option of helping out family if needed, without having to wait until they inherit.

kidmugsy

Suppose you had thoughts along the lines of:

(i) Winter weeks in the sun. It's really very pleasant to go off somewhere mild and sunny for a week in January or February. (We can recommend Madeira.)
(ii) Holidays in Southern France or Italy in May, before it gets too hot. So it would be nice to have a car that's young, reliable and comfortable enough to take.
(iii) Jaunts to the Antipodes: NZ for January or February, Adelaide or Perth for March.... Or late September/early October for Queensland.
(iv) May or early June in the West Highlands while the easterlies are blowing. Delicious. A 4WD would help to open up some wonderful hill-walking for you.
(v) Sailing in the Aegean in .....



Cost out a few pipe dreams like these, and decide whether the extra pension or the lump sum is a better bet.

nettymes

Something else to think about:

The Local Govt Pension guarantees 10 years of pension payments (well mine does and I think the rules are the same for everybody), so if you die within 10 years of retirement, the balance of the 10 years is paid as a lump sum to your estate.