Take pension early? USS

bspear

55yrs old, no mortgage, kids flown, working part time £10k a year.
17 years in a USS pension, stopped paying in 8 years ago
Calculator says I can get £9.5k a year now or £14k a year in 10 years time at 65
Presuming it's all a gamble on life expectancy, but if I assume I last till the average 83 years doesn't the maths say I might as well take it now?
Or are they right when they say "it's more complicated than that" and get some paid for advice?

Cheers in advance

ussdave

The ERFs for the USS scheme are quite reasonable so it's really down to whether or not you need the money now.

For many other schemes it's as you say though.

Based on the figures you've stated it sounds like it could be a nice way to feel like getting your state pension early.

SMcGill

Don’t rely on the calculator, ask USS for a quote. They will take into account the specific terms under which you accrued pension entitlement and you may get more than a generic calculator estimates. You may not, but better to ask than guess

bluenose1

Agree with SMcGill, you may be pleasantly surprised. 
Also  worth looking at the USS commutation factors not only for ERF but for taking maximum tax free lump sum. They are very generous, presumably as they want to reduce their liability.
Though have to weigh it all up potential inflation etc compared to how much you need the money now eg some people need the money now and use it to help bridge  to state pension starting when their income will increase.
If the money is not required the wise heads on here would say leave it until pension age, however if needed really worth doing the sums to improve finances while more likely to have better health. 

daveshep26

ussdave said:

The ERFs for the USS scheme are quite reasonable so it's really down to whether or not you need the money now.

For many other schemes it's as you say though.

Based on the figures you've stated it sounds like it could be a nice way to feel like getting your state pension early.

I wouldn't prioritise breakeven analysis out to 83 or whatever - If you're living on 10k now, 9.5k immediately (& forever) sounds a good deal - I think you need to look at what else is changing, partner's income(??), greater spending expectations over next decade or so, I think the (potential) delta there is what you need to evaluate/ mitigate.

bspear

Since had a free session with an IFA who knows USS and he could think of no hidden issues and had the decency to not even try and sell me any 'products'!

So I'm seeing:
take it now:  £9.5k over 28yrs + £28k lump sum = £294k
take it later: £14k over 18yrs + £38k lump sum = £290k

On the morbid side, if I die early I gained, if I die late my house pays for the care home!

On the positive side, enjoy it while I'm still fit and healthy - more time riding my bike!

kinger101

bspear said:

On the positive side, enjoy it while I'm still fit and healthy - more time riding my bike!

And provided you're comfortable financially, that's the important thing.

bluenose1

Option 3 - for me would be to consider reducing pension to take maximum tax free lump sum as my years to bridge when I need the income most will be from 56 -67. 

From 67 I know I will have more than sufficient income so trying to front load my retirement.