Company pension help needed

Statto

I am 55 and a civil servant earning £25k pa. From a previous employment I also have a company pension with an investment bank which will pay out £240k lump sum and £35k pa when I am 60.

I could do with some money now, to buy a property abroad, and have got quotes for early drawdown of the pension. I have been quoted £183k lump plus £27K pa, based on an early retirement reduction factor of 0.72.

Is taking the early pension the right thing to do. I have done the basic calculation which says that it will be 2021 before I reach the crossover point. i.e. start to lose out in terms of money taken out of the fund. Then again I may die before then!

Statto

Statto

Has anyone got any comments for me?

I'm still in the dark.

EdInvestor

Looks fine to me.Usefully it will enable you to avoid paying higher rate tax when your other pensions kick in.:)

Debt_Free_Chick

Statto wrote: »

I could do with some money now, to buy a property abroad, and have got quotes for early drawdown of the pension. I have been quoted £183k lump plus £27K pa, based on an early retirement reduction factor of 0.72.

That's "about right". As a broad rule of thumb, if you work on a reduction of 6% pa (or 0.5% per month) - for each year/month between your early retirement date and the normal retirement date - then this is about the "normal level" of reduction.

A lower reduction is a bonus. A higher reduction could be due to a number of factors - the Trustees may simply be cautious about releasing money early and its impact on the funding/security of the liabilities.

You will, of course, go into the higher rate tax bracket with that income