DB Pension – full pension or take a lump sum?

mollycat

I took smaller lump sum, larger pension.

Reasons,

1. NHS rate of 12:1 is awful.
2. No mortgage or other debts to pay off.
3. No (touch wood), health issues at present which would impact on life expectancy.
4. Struggling to find good use to make of smaller lump sum anyway!!

Like others say, all down to personal circumstances/choice; also the better rate does make it less obvious.

Good luck whatever you do

Audaxer

kidmugsy wrote: »

(Can you be confident that basic rate tax will stay as low as 20%?)

That was one thing that crossed my mind and worth taking into account, just in case a new government suddenly ups the 20% tax rate by much.

(iv) I thought the finances of that DB scheme, and the competence of its management, were both in doubt. (How's yours?)

I think all is fine with the scheme, so although worth considering I'm not too worried about that.

I think most people in my position would take the tax free lump sum. I just want to convince myself it is the right thing to do.

ukdw

By coincidence your 1:17.2 looks to be almost exactly the same as the state pension deferral rate of 5.8%.
Is it worth considering taking the £40k. Keeping the saved £8k tax, then investing the remaining 80% for 6 years, the using it to replace the lost income from deferring state pension for just under 5 more years to get your guaranteed £2325 gross/£1850 back again. The replacement increased state pension also probably not be limited by the 2.5% max increase that your DB pension is.

The main disadvantage with taking this approach would be losing the extra £1,850 for 11 years - which would probably push me towards not taking the lump sum.

Audaxer

ukdw wrote: »

By coincidence your 1:17.2 looks to be almost exactly the same as the state pension deferral rate of 5.8%.
Is it worth considering taking the £40k. Keeping the saved £8k tax, then investing the remaining 80% for 6 years, the using it to replace the lost income from deferring state pension for just under 5 more years to get your guaranteed £2325 gross/£1850 back again. The replacement increased state pension also probably not be limited by the 2.5% max increase that your DB pension is.

The main disadvantage with taking this approach would be losing the extra £1,850 for 11 years - which would probably push me towards not taking the lump sum.

Thanks, but I'm not keen on deferring my State Pension. I am going to make voluntary NI contributions for the next 6 years to get it up to my maximum weekly forecast of £164 as that seems a good deal, as I will recoup the contributions within about 4 years of receiving the State Pension.