Final Salary Options

Nash51

I have 13 years of a final salary pension plan. I have 3 options on maturity at 65 in a few months.
1) receive 20k per annum, index linked, 50% to spouse on death.
2) receive 15k per month , index linked, 50% to spouse on death plus 90k tax free lump sum
3) take the transfer value of 400k and put it into a SIPP

I am in good health.

What would you do?

Southend1

Nash51 wrote: »

I have 13 years of a final salary pension plan. I have 3 options on maturity at 65 in a few months.
1) receive 20k per annum, index linked, 50% to spouse on death.
2) receive 15k per month , index linked, 50% to spouse on death plus 90k tax free lump sum
3) take the transfer value of 400k and put it into a SIPP

I am in good health.

What would you do?

I think there is a typo in option 2. Do you mean £15k per annum?

Nash51

Oops, yes, 15k per annum. I would have preferred it to be per month!

BobQ

Nash51 wrote: »

Oops, yes, 15k per annum. I would have preferred it to be per month!

Are you planning to retire at 65? or 66? Or?

How much do you think you need to live on when you retire?

Do you need a lump sum?

Nash51

Hi
Current plan is to retire now, 65.
I reckon an income of 35k would be the minimum. I have a small SIPP which should generate 5k per annum as well as 10k of property rental income per annum.
The lump sum I was intending to use to pay off my remaining mortgage.

BobQ

I have just noted that you have posted this in the auto-enrollment forum (a subset of the main pensions forum). You will probably get a better range of views if you start something in the main forum.

Unless you have any short term health issues, (c) is unlikely to be supportable. Giving up a DB pension is generally seen as not being a good idea. You would need an IFA to sign it off and there are few situations when that would be good advice.

My view is that (a) £20K pa indexed for life with support for your wife if the worst should happen is the best option and you should try to hang on to the security of that.

What you need to work out is how best to pay that mortgage off. Not sure if this to pay off your home or the BTL mortgage.

Option (b) will solve your mortgage pay off, but at the expense of £5K of index linked pension. Do you need all the £90K? Can you pay the mortgage off via savings? How long do you plan to retain the BTL? These are the sorts of questions you need to ask.

But I would suggest posting this on main pensions forum

Nash51

Thanks, should have got to know the site better before posting.

I won't repost as reading the other threads I've got the information I need.

Amazing how many other people ask the same/similar questions.

Thanks to those that responded to my query despite being in the wrong section.