pension commutation

Teaandscones

hyubh wrote: »

How did the assumptions three and a bit years ago fare out of interest?

My understanding is that commutation has been popular and that the actual has been greater than the 50% of inland revenue maximum assumed. Whether it was in the best interests of the pensioners to commute, I doubt it very much though in terms of the fund, the more that commute the better.

philc9

I'm in reasonable health myself, tho' neither of my parents made it to 75.

I get state pension in May 2020, nine months after my 65th birthday and five years after I intend to retire.

The consensus seems to be to take the maximum pension. I think that's what I'll do, and rely on the [reduced] lump sum for those five years to supplement the pension.

If I drop dead six months after retiring I'll come back and haunt the pension administrators!

Thanks everyone.

quotememiserable

philc9 wrote: »

If I drop dead six months after retiring I'll come back and haunt the pension administrators!
Thanks everyone.

And don't forget to come back full of thanks if you live to average age :-)
Did you know 50% of people live beyond average age? If you are one of those (far higher liklihood that dying early) then you keep on collecting.

rpc

quotememiserable wrote: »

Did you know 50% of people live beyond average age?

<pedant> 50% of people live past median age </pedant>

bigadaj

rpc wrote: »

<pedant> 50% of people live past median age </pedant>

Actually slightly less than 50% as a tiny fraction will die exactly when they're predicted to.

quotememiserable

bigadaj wrote: »

Actually slightly less than 50% as a tiny fraction will die exactly when they're predicted to.

That depends how precise your timing is.

rpc

bigadaj wrote: »

Actually slightly less than 50% as a tiny fraction will die exactly when they're predicted to.

Expressed as 50%, I think I was accurate.

Expressed as 50.0000000000000000000000000000000000000% then there might be a slight difference.

Andy_L

hyubh wrote: »

I would have thought the uptake at which pensions were commuted would have itself featured on the actuary's valuation report last year...? The 12:1 rate is fund-friendly by design of course...

I belive that the 12:1 rate was designed to make the 1:60th scheme give the same lump sum/pension as the previous 1:80ths +3x lump sum rather than be fund friendly (especially what with there being no fund in most of the public sector schemes anyway). In addation at the time, considering lower life expectancy and better returns, it would have been a fairer rate

Seabee42

I would say that for an increasing pension 12 to 1 has not been a fair rate for at least twenty years. (Ill health excluded assuming Ill health results in a much reduced life expectancy).

quotememiserable

Seabee42 wrote: »

I would say that for an increasing pension 12 to 1 has not been a fair rate for at least twenty years. (Ill health excluded assuming Ill health results in a much reduced life expectancy).

I would absolutely agree. The industry mid point is about 16 currently and some schemes pay at 20x