Higher lump sum or higher pension

Couponqueen

I know question been asked before re 95 nhs pension and taking commutation but I am going back to work so wonder if better take higher pension or lower as if I go back to work would be in 40% tax brackets with pension ?

Audaxer

What is the commutation factor for the NHS pension? It would probably be only worthwhile taking the lump sum if the income generated from the lump sum with reduced pension results in higher net income than the net income you would get with the full pension and being in the higher rate tax band.

zagubov

Depends on how old you are, how close you are to your NRA, how much longer you're returning to work for, and are you looking to reduce your hours. We can't advise you accurately but only give you things to think about.

I'm in the TPS and I think they, like you, have a lowish commotion rate (12:1). They expect you to live until about late 80s if you retire at about 60 now. So unless you think you won't reach your mid-70s maybe you might wonder if you need your lump sum to be bigger.

Me, I'm paranoid about being left impoverished in my later years, so I'm not tempted to increase my lump sum.

I'm back at work and am in a higher tax bracket now. Well, fair enough, I'd rather pay my dues than sit on a pile of cash that will devalue as Father Time drags me into my uncertainly long future.

I might pay extra into my new pension. That's one option.

kidmugsy

Couponqueen wrote: »

I am going back to work so wonder if better take higher pension or lower as if I go back to work would be in 40% tax brackets with pension ?

As the law currently stands you could avoid the 40% tax simply by contributing enough to a personal pension of some sort. That new pension would eventually provide you with a 25% tax-free lump sum.

ffacoffipawb

kidmugsy wrote: »

As the law currently stands you could avoid the 40% tax simply by contributing enough to a personal pension of some sort. That new pension would eventually provide you with a 25% tax-free lump sum.

LTA permitting

crv1963

Commute is 12:1, the NHS Pension agency will tell you how much you can earn if retiring and returning to work, your pension officer will give you a broad figure. If the new job is none NHS then do as kidmugsy suggests and put enough into a pension to reduce tax below the 40% bracket.

Are you at 45/80 for the NHS pension? If not carry on until you reach the maximum?

kidmugsy

ffacoffipawb wrote: »

LTA permitting

We're not all stinking rich.

Mind you, I thought the nearly-retrospective nature of the LTA changes was poor stuff.

xylophone

so I'm not tempted to increase my limp sum.

That bad,eh?:)

xylophone

We're not all stinking rich.

But how we wish we were......(sigh):)

Couponqueen

Hi all sorry for delay didn’t get notifications .

Firstly 56 at retirement but have 42 80ths have preserved rights of mental health officer so if stayed on another year will unfortunately get into annual allowance and LTA as worth two years in one year so did the calcs and decided not to pay in over 10k into pension for further year
NHS is 12:1 so understand the longevity issue. But state pension will kick in hopefully by 70 if I am lucky ! Difference in pension is approx 31 per annum or 38 per annum can earn approx 35 on return so either 66k or 73 k this is slightly underestimated figures . Have mortgage to pay off although have seen posts that say why when low ? But also been juggleing cards to renovate house plan to pay off then sell up approx 5 years which will release equity then finally stop work at 61