annuity quote ...at last

billyboggins_2

ok,so i have rec'd my final figures from my pension provider for my s32 type pension which matures in June this year .From a pot of £102447 they are offering me a lump sum of £8301 and a pension of £6365 with 50 % spouse with 3% yearly increase OR no lump sum and a pension of £6996...any comments / views appreciated

kidmugsy

Unless you've a particular reason to take the lump sum, the extra pension looks to be potentially better value for you (depending on your age) . It's as if the £8301 were spent on buying an annuity yielding 7.6%p.a. with decent escalation. The disadvantage is that the pension is exposed to income tax.

I take it that the lump sum is so small because of some feature of s32?

billyboggins_2

i am told its because of my GMP of £6325,,,the lump sum is important for me (credit card debts)

kidmugsy

billyboggins wrote: »

,,the lump sum is important for me (credit card debts)

Fair enough; lump sum it is, then.

RichandJ

kidmugsy wrote: »

Fair enough; lump sum it is, then.

Slightly OT, but as a 3rd party administrator of occupational schemes I'd say the PCLS take up was 95% plus. Although most private OS's have much better comm rates than the usual public sector 12:1 queries we see on here.

Whether all these people have taken advice, see a big pot of money & want it, or have planned their finances around it is known only unto dog. (Deliberate)

kidmugsy

I took a large lump sum for three reasons. (1) I thought my principal pension scheme was run by mugs, and thought it wise to get as much as possible out (without taking the extreme gamble of transferring the lot out). (2) We had debts to clear. (The result of careful planning not wild extravagance. Alas.) (3) There proved to be a wonderful investment for part of the lump sum - deferral of our State Retirement Pensions.

Suppose you give up £1000 p.a. of final salary pension and get approx £20k tax free. That's equivalent to £25k of taxed income which you can spend while you defer state pensions for long enough to bring in your reward of Extra Pension of approx £2.5k p.a. So, £1.5k p.a. conjured up from nowhere; or, strictly, from your fellow taxpayers. No wonder the govt plans to halve the reward.

dunstonh

Remember that if the OP gives up the GMP then it could reduce indexation not only on the section 32 but also on part of the state pension depending the years in question.

any comments / views appreciated

How does that compare to rates obtained via the open market option with and/or without GMP accepted?

billyboggins_2

dunstonh wrote: »

Remember that if the OP gives up the GMP then it could reduce indexation not only on the section 32 but also on part of the state pension depending the years in question.



How does that compare to rates obtained via the open market option with and/or without GMP accepted?

can't find anyone to accept the GMP with my pot but on comparison sites just using the £102446 and 8% cash its very favourable to within £100 p.a. and some considerably less ..so i am quite happy with the eventual outcome after years of being told my pot would not be enough to meet the GMP and there would be no cash available