Civil Service Pension Classic - Inverse Commutation of Lump Sum - Worth it?

Eye2021

Well I am 60 next March and looking to draw down the benefits from my preserved pension. As I currently am lucky enough to already have spare capital lying around (part invested, part in cash) I am looking to commute part or all of my lump sum for an enhanced pension.

I am asking for a quote from CSP, which will give me an indication on the rate of return - but I can find no current information online on the commutation rate, or views on wether or not it's considered a good deal. If I look at the 'Added Years' calculator (which I'm not eligible for - and is different as this does not use £ from the pension pot) this indicates a 4.24% secure index linked return.

In a world of low interest rates and rising inflation 4.24% (if i get it) seems like a good investment ? Or I expect that if I invested the lump sum elsewhere with luck I could match or exceed this and have the flexibility of capital being available.

Any views/advice please ? Thanks

Dazed_and_C0nfused

You need this page,

https://www.civilservicepensionscheme.org.uk/members/actuarial-factors/

Looks like you would get £5.00 or £4.64 for each £100 lump sum given up depending on whether you want spousal benefits to apply.

hugheskevi

The factors are at this link - https://www.civilservicepensionscheme.org.uk/media/556941/pcsps_inverse-commutation-classic-only-190919.pdf

When making comparisons you might consider annuity rates, if so, remember that an annuity would be purchased with taxable income, whereas via inverse commutation you are using tax-free money to purchase a taxable income.

Eye2021

hugheskevi said:

The factors are at this link - https://www.civilservicepensionscheme.org.uk/media/556941/pcsps_inverse-commutation-classic-only-190919.pdf

When making comparisons you might consider annuity rates, if so, remember that an annuity would be purchased with taxable income, whereas via inverse commutation you are using tax-free money to purchase a taxable income.

Great thanks -  I found that document before but wasn't sure if it was up to date. 
So 5% index linked looks good - except of course the income is taxed whereas the lump sum isn't