A question about a pension pot

kah22

I'm not to sure what I should be asking here so forgive me if I get some of my termanology wrong. My sister has asked me to do this post

Sister is now approaching retirement, she works for the Education Department in Northern Ireland. With the exception of a few years break she has been working there since her twenties.

Recently a friend of hers told her that she could lift ALL of her pension pot in one go and not rely on a monthly amount going into her bank account. So is her information correct and if so can anyone tell me a little bit about the scheme or give us a link where we might get more detailed information.

If this is the case and you can take all your pension pot at one go there has to be advantages and dis-advantages. The two that would spring most quickly to mind - you might live to be 101 and find you had no money left or that that investment you made completely sunk you. Of course the opposite could happen and you might hit the jackpot!! Or you could die young and then the family would have a nice windfall (ah shouldn't be saying that )

atush

No, her friend is either mad or in some sort of scam.

This is a Defined benefit pension that provides and indexed linked income for life. Which is paid out i would assume monthly.

There will be some sort of LS.

Huge changes to personal and Defined contribution pensions were just announced to todays budget, but these wont affect DB/public service pensions.

kidmugsy

JonnyThom wrote: »

.. unfair what has happened to our pensioner. They have worked hard all their life

Some have, some haven't.

JonnyThom wrote: »

and now they facing cuts

What cuts do you have in mind?

xylophone

Sister is now approaching retirement, she works for the Education Department in Northern Ireland. With the exception of a few years break she has been working there since her twenties.

This? http://www.deni.gov.uk/index/school-staff/64_teachers-pensionscheme_pg/64-your-pension-benefits.htm

Calculation of benefits


If you were a member of the scheme before 1 April 2007 the method of calculating benefits, which will consist of an annual pension and a lump sum based on reckonable service and average salary, is as follows:

Pension = (Service X Average Salary)/80

The lump sum is three times the pension.

If you were a member of the scheme before 1 April 2007 and have service on or after that date you can convert, ‘commute’, part of your pension to receive a lump sum up to 25% of your fund value. The formula for calculating the maximum amount of lump sum benefits that can be paid is as follows:

(Pension X 20) + (Lump Sum X 20/12) / 4.6667

If you became a member of the scheme on or after 1 April 2007 your benefits will consist of an annual pension based on reckonable service and average salary. It will be:

Pension = (Service X Average Salary)/60

You can commute part of your pension to a lump sum and the formula for calculating the maximum amount of lump sum benefits that can be paid is as follows:

(Pension X 20)/4.6667

The commutation formulae represent 25% of your fund value. You can choose up to 25% maximum to be paid as a lump sum. In doing so there is a consequent reduction in the value of the annual pension. For each £1 of pension commuted there will be £12 of lump sum paid.