Retirement lump sum

Glen_Clark

Isn't the lump sum tax free but the pension taxable?
In which case taking the pension is only tax efficient for those whose income is below the income tax threshold?

ffacoffipawb

Thrugelmir wrote: »

US Treasuries offer a far better yield than UK Gilts.

At the price of currency risk, could go either way.

Rheumatoid

Biggus_Dickus wrote: »

Out of interest,... you say the OP’s commutation factor (22.4) is very good,...but at what level is a ‘ commutation factor’ considered to be poor, good or excellent these days?

My wife’s sister has a Final salary DB pension that at the moment has a predicted commutation factor of 11,....which I reckon is a bit miserly.

My TPS is 12 I think. NHS is probably the same.

LHW99

Not to be forgotten is your / your spouse's SP provision. If there are gaps, paying to close those could be worth while before you retire.

Biggus_Dickus

Rheumatoid wrote: »

My TPS is 12 I think. NHS is probably the same.

About the same then:) ;...my wife’s sister is actually an NHS nurse with 40+ years continuous service,... and as I said earlier, on the face of it, the commutation factor of 11 seems a bit miserly.

However, I’ve no idea how NHS pensions are calculated and I don’t know how much she’s personally contributed to her pension fund over the years.

mollycat

Biggus_Dickus wrote: »

About the same then:) ;...my wife’s sister is actually an NHS nurse with 40+ years continuous service,... and as I said earlier, on the face of it, the commutation factor of 11 seems a bit miserly.

However, I’ve no idea how NHS pensions are calculated and I don’t know how much she’s personally contributed to her pension fund over the years.

NHS commutation, (1995 section anyway) is 12:1.

Your wife's sister won't have an amount in a "fund" as such, contributions as a percentage of one's salary are better thought of as a "membership fee", as the amount paid in over a career has no real bearing on the pension size.

Pension is calculated on length of service expressed in 1/80ths, (again 1995 scheme), multiplied by best year of final 3 years salary; assuming one retires at NRA.

Audaxer

Glen_Clark wrote: »

Isn't the lump sum tax free but the pension taxable?
In which case taking the pension is only tax efficient for those whose income is below the income tax threshold?

In many cases where a higher income is essential, then even although the pension is taxable it is more likely to be able to provide the higher income than taking the tax free lump sum. However in the OPs case the commutation factor is very good, so taking the lump sum or some of it to invest might be an option.