Larger pension or lump sum/smaller pension

stephenadarglas

I was in the same position however different monetary amounts (Teachers Pensions).

I kept the higher pension purely because it's 'safe'. Also my wife will be a beneficiary on my death.

Albermarle

I dont think actuaries add on a bit more for luck!

No, I did not word it very well . I meant what you said, that they are looking forward and estimating ongoing improvements .

shinytop

I'm in a similar situation but with a break even point of 25 years at 59. I'm keeping the bigger pension as want the certainty to compliment my more risky DC investments. I don't need the lump sum as I have that from the DC pension when I want it.

p00hsticks

stephenadarglas wrote: »

I kept the higher pension purely because it's 'safe'. Also my wife will be a beneficiary on my death.

I suspect you'll find that a surviving spouse would get the same pension whichever option you choose - both of my DB pensions work like that.

crv1963

p00hsticks wrote: »

I suspect you'll find that a surviving spouse would get the same pension whichever option you choose - both of my DB pensions work like that.

Taking a larger lump sum shouldn't have any effect on the Survivors Pension- because that is not yours to reduce. My wife will like p00hsticks wife get the same survivors pension regrdless of what amount I choose to commute or not from my pension.

robin61

If the OP is just going to stick the lump sum in the bank and/or invest it in some other way I'd be sticking with the larger pension. If the OP was going to use it to pay for something they would otherwise not be able to do then maybe that's a different decision. You only get one shot at life.

crv1963

robin61 wrote: »

If the OP is just going to stick the lump sum in the bank and/or invest it in some other way I'd be sticking with the larger pension. If the OP was going to use it to pay for something they would otherwise not be able to do then maybe that's a different decision. You only get one shot at life.

There is also life expectancy to consider. Well at least for me it is a consideration, if I take a larger lump sum/ reduced pension then kick the bucket Mrs CRV has a larger cash sum to inherit and the same survivors pension as she would have had anyway.

Or I could gamble that I will live 30+ years in retirement and the larger pension would benefit us both. Luckily I don't need to decide for a little longer.

MaxiRobriguez

robin61 wrote: »

If the OP is just going to stick the lump sum in the bank and/or invest it in some other way I'd be sticking with the larger pension. If the OP was going to use it to pay for something they would otherwise not be able to do then maybe that's a different decision. You only get one shot at life.

Sort of agree, but the op may be able to access cheap credit facilities to cover off any large expenditure which can be met by the larger pension over the long term.

Seems to me that all else equal the right answer here is bigger pension.

hemeloid

Different horses for different courses, as the saying goes. My wife is 10 years younger and kids are in their mid-teens, so it feels like a 'no-brainer' for me to take the lump sum on the grounds of (a) life-expectancy, (b) survivor pension is the same value either way and (c) the need for having a higher-spend profile at the start of my retirement, intended to be in 2 years.

Ganga

TheRealBigEasy wrote: »

Hi,
I have a final salary pension maturing in Mar 2020 (Aged 60) and would like some advice.

I have been offered
£24,000 annual pension or
£110,000 tax fee lump sum + £16,500 annual pension.

I am not working, nor intend doing so, and I am mortgage and debt free.

I also have a £100,000 FSAVC policy maturing at the same time and was thinking of taking this in lump sums of £10,000 or £20,000 a year.

Would I be better off taking the larger pension or the lump sum and smaller pension.

Thanks for any advice.
Jon L

Are you sure the whole £110,000 is tax free?