Methodology to compare lump sum V bigger pension

FatherAbraham

kwikbreaks wrote: »

By frozen I mean ...

... "deferred"?

Warmest regards,
FA

RichandJ

FatherAbraham wrote: »

... "deferred"?

Warmest regards,
FA

Left before 1/1/86. Might possibly merit 'frozen' on this occasion. Unless there's any pre 88 GMP.

Of course it is also a deferred, just possibly a non-revaluing one.

Pedant hat off.

jackyann

Obviously one of the factors is spouse's pension.

I really don't know if this is helpful, but this is what I did: If you look on your local council website you get links to information about your area, including life expectancy.
I thought about the ages that my mother, grandmothers & related aunts died, and of what, compared to my own health. I decided I would probably make the local life expectancy and did my sums on that.
In the absence of obvious inherited health problems / exposure to carcinogens / current disease, it seems as good a way to estimate as any (82, by the way!)

kidmugsy

jamesd wrote: »

. If you worry about early death take a look at term insurance policies. Those are very cheap for people in reasonable health and you can easily pay with some of the higher income.

That's a good point.

Also, if you'd like some capital available, it would be cheaper to take a loan and pay it back from the bigger income, than give up some of the income just to get some capital.

jamesd

RichandJ wrote: »

You youngster, you, jamesd.

I confess that I have not been looking at such rates until after 2006 or so, so my sample size is quite recent.

RichandJ wrote: »

It used to be the old 'standard', 9.0 for men & 9.6 (? Or was it 10.2 ? Memory going.) for women at 65, in a lot of private sector schemes. 0.02 interpolation per month early/late.

Interesting, thanks.

RichandJ wrote: »

Most I've seen have improved this, at least once if not several times, since the 90s, but there may be the odd legacy scheme and, IIRC, the mineworkers scheme that still have the old rates.

I happened to notice a mineworkers scheme that was being evaluated for the PPF. Commutation rate improved to something like 28:1 or 29:1, I forget the exact value. Was described by the PPF as the actuarially neutral value, though it's well above their usual commutation rate so it might say something about life expectancy for that job type. Might not be the one that you're thinking of, though. Oddly, I don't recall the number in the FAQ as being age-linked. I don't see any of the mineworkers schemes currently in the PPF, though, just several in the assessment stage list.