SIPPS ,the LGPS and other questions

Retire2021

Hello again everyone,
I have been doing a bit of spreadsheeting, comparing the following two options

• Taking my DB immediately (~£12,000pa) + 1/10 of my SIPP total (~£4000pa)  spreading the SIPP over 10 years until my SP kicks in
• Taking my SIPP as £16,000 pa for 3 years until it is drained, then starting my DB which would be then ~£14,000pa.

I had thought that they would be equal, or indeed the deferring DB option would be better, but in actual fact the first option is financially better until I hit about 84-86 years old, when the second option takes over. People always say it is best to defer taking the DB as long as possible to minimize the actuarial reduction, but is this really true in the LGPS where the break-even point looks like it is around life expectancy. And isn't it better anyway to have the momey while you are - relatively - young ?

It is entirely possible I am missing something glaringly obvious, but it seems to me that taking the DB, even allowing for the fact that will cause my SIPP withdrawls to be fully taxed, is the better option. Defering the DB means I miss out on 3 years of DB (~£36,000) which takes 20 years from which to recover ?

mark55man

Interesting debate and one that I am having.  A suggestion - although this is your thread, I think that question might benefit from a thread of its own (you can link back and forward), but many people outside LGPS will have the same sort of question.  I would certainly be interested - and have been playing around with the same line of mental gymnastics.

Retire2021

@mark55man, you may be right and I will think about maybe starting a new thread about the perceived benefits of delaying a DB pension.

mark55man

up to you - if you do then maybe post a link here, so all your helpers/followers from this thread will get a notification - although I do try and stay on top of this forum as I learned so much over the years