Pension buyout offer

AntonR_2

Hi all

My mother, who is in her 80s, has recently received a buyout offer from one of her pension providers. It is not a large sum (around £7500) and currently the pension plan gives her just under £1000 per year. She is unsure whether to take the lump sum as most of her brothers and sisters have lived into their 90s. Does anyone have any advice?

Thanks

kidmugsy

(i) Is the pension index-linked?
(ii) Does she pay income tax on it?
(iii) If she took the lump sum, what would she do with it?
(iv) What does she currently do with the pension?

Linton

When in her 80s? About half the females currently aged 80 can expect to live til 90. Females aged 85 are expected to live til perhaps 93 on average. If she is in good health and comes from a long-lived family one would assume her chances are significantly better than average.

Although pension companies dont offer buy-outs from the goodness of their hearts it seem to be not an outrageously bad offer. Her decision could sensibly be based on other factors than pure financial advantage. Does she need the income? If so then dont take the offer, especially if the pension is index linked. If she doesnt need the income has she some specific use for the lump sum?