A Pension Newbie

BallouBear

Hi All, 
To be honest, I have never bothered looking into my pension. Worked for the same company these past 34 years and that was where my life was concentrated.
However, I have just been made redundant, so now, at 58 I need to examine my pension options. I will be basically debt free. House paid off etc etc.
If I take my pension now its £22K p.a. I can take a PCLS of £104K which reduces my pension to £15.5K p.a. 
So now I am in a quandary if I should take the PCLS. 
I was thinking about asking a financial advisor, but looking through the internet all I ever read is that they only look after themselves, trying to sell stuff. Which makes me incredibly nervous. Working through various financial advise links I just seem to be going round in circles.

Can anybody here offer me some sound advice as to what to do?

atush

How much do you need to live on?  Will you be getting another job?  How much was your redundancy payment?

Generally, you dont have to take the full 104K but can get less but still some and a larger pension.

xylophone

Can anybody here offer me some sound advice as to what to do?

Not permitted - suggestions only!

The commutation rate  (each £1 of pension foregone buys £16 of lump sum) is not generous.

You are only 58 and could live into your nineties.

Do you want/need/ could think of a use for/ a lump sum now?

Do you have a choice of taking a smaller lump sum and higher pension?

How does your pension increase in payment?

What figure is shown for pre 88/post 88 GMP on your leaving statement?

Have you obtained a state pension forecast? https://www.gov.uk/check-state-pension

What exactly does it say?

Albermarle

I was thinking about asking a financial advisor, but looking through the internet all I ever read is that they only look after themselves, trying to sell stuff.

If you went to an Independent financial advisor , they do not sell you anything as such , but they do charge for their time .

In any case with your sort of company pension there is little point paying for something you can simply work out for yourself .

You will get £6.5K less pension a year in return for £104K now . So in simple term, you are swopping £104K for 16 years X £6.5K . That is a poor deal even though the £104K is tax free , because the £6.5K would normally increase with inflation.

An average 58 year old man will live another 25 years .

So unless there are some mitigating factors , like you desperately need the cash now , then best not to take it .

To be honest, I have never bothered looking into my pension

In which case you have been lucky to find yourself with a pension with a nice guaranteed income , something many people do not have . A pension of £22K pa , presumably inflation linked at age 58 would cost around £700,000 to buy on the open market . So in the end whether you take the PCLS or not you are in a much better than average position compared to the large majority,  just to put things in perspective .

BallouBear

I think all in all, this has hit me pretty hard. Redundancy plus pension, I am struggling with it all, especially the redundancy. Albermarie, I suppose yes, I am fortunate, but right now I am struggling to get my head round it all and found myself just getting depressed.
It sounds like I should not take the PCLS, but just stick with the pension.
Thank you for any advice, it really is appreciated.

Black_Cat2

BallouBear said:

I think all in all, this has hit me pretty hard. Redundancy plus pension, I am struggling with it all, especially the redundancy. Albermarie, I suppose yes, I am fortunate, but right now I am struggling to get my head round it all and found myself just getting depressed.
It sounds like I should not take the PCLS, but just stick with the pension.
Thank you for any advice, it really is appreciated.

Things are feeling bad at the moment but that is all it is... a moment.  Redundancy is hard, been there myself but you can look to move on from it and revaluate your life.  Find something positive to occupy your mind, something you might enjoy doing such as gardening, walking, meeting with friends/family (socially distanced ofc).  You will come through, I wish you well and gl with your Pension options 💚

xylophone

I am struggling with it all, especially the redundancy. Albermarie, I suppose yes, I am fortunate, but right now I am struggling to get my head round it all and found myself just getting depressed.

Unsurprising when

Worked for the same company these past 34 years and that was where my life was concentrated.

 Being made redundant in these circumstances (rather than when, as an acquaintance of mine put it,

"just longing to be severed") can feel like a bereavement - a bereavement tends to be followed by  disorientation, grief (and even anger) at the loss. I think this must be exacerbated by the  current national situation .

But you will know from experience that these feelings do eventually pass.  

Albermarle

BallouBear said:

I think all in all, this has hit me pretty hard. Redundancy plus pension, I am struggling with it all, especially the redundancy. Albermarie, I suppose yes, I am fortunate, but right now I am struggling to get my head round it all and found myself just getting depressed.
It sounds like I should not take the PCLS, but just stick with the pension.
Thank you for any advice, it really is appreciated.

My comments were mainly aimed at the pension situation . Without really knowing it you have quite a good pension arrangement and its worth being aware of that . On the redundancy issue though it must be very difficult after all these years .
Did you get a redundancy package ? If you did and nor sure what to do with it, then we would be happy to try and point you in the right direction /indicate what alternatives there might be.

mark13

Sorry to hear about the redundancy,  it reall is tough. If this is a DB scheme I would also get a CETV (cash transfer value) for comparison. 

barnstar2077

Sorry to hear of your redundancy.  I would personally take the increased yearly income every time.

Having lived for your work for so many years I can understand how these seem like dark days.  I guarantee you though, with a few years under your belt you will be thanking your lucky stars and wondering where you found the time to work!  You are still young, the world is your oyster!

Albermarle

mark13 said:

Sorry to hear about the redundancy,  it reall is tough. If this is a DB scheme I would also get a CETV (cash transfer value) for comparison. 

,At least now he has the certainty and simplicity of a good regular guaranteed income . Considering the OP knows nothing about pensions and is struggling with recent redundancy , I do not think there is much point going down the uncertain route of CETVS , pensions transfers , managing investments etc.