Time has come?

HIA

I am 58, stopped work march 2021 and I think the time has come to claim pensions rather than living off capital as I have done for the past year. I don't think pension wise will help me as both my pensions are final salary, the main one USS (university) and the other the last four years in NHS.  I have £9k in a wealthify s&s ISA which has lost money over the two years I've had it and I also set up a personal pension with wealthify last year to benefit from tax relief which has also lost money at present. I am about to inherit £70k in cash. 

I need to pay an additional £2k to get a full state pension at 67 which I intend to do.

What should I be considering before I submit my pension forms? How do I decide how to split between lump sum and annual pension?  OH just sees the numbers and says take the max lump sum which may be correct but not if I earn more on it leaving it in pension.

Is a financial advisor appointment a good idea? I have no debt and we own our house outright. I reckon I spend £18k a year, I pay for everything except council tax which oh pays. I have no idea where to put money to earn any decent return at present and am scared I make a big mistake.

Kim1965

Whdaz are the pension figures?? Pretty sure the commutation rate for nhs and uss is not generous with ref zo taking lump sums. 

Brie

what's the normal retirement date for both the pensions?  if there is little or no reduction you might as well take them asap.  if there is why not wait a bit longer and live off the inheritance in the meantime.

do you need the lumpsums for anything??  you could of course invest them and take advantage of the low market to boost your money later.  And how is your health?  Are you likely to need care at some point?  In which case having a lump sum will not necessarily be an advantage.  And what's your OH living off of?  You need to consider the whole picture.

you can get a free 1 hour session from an ifa which might help solidify your thoughts.  I'm doing this currently and the 1 hour was a long chat about all the things about our finances and after that they have been getting the actual figures from my various pensions prior to giving me some general advice on how to proceed.  ££ gets paid only if/when I get them to handle the money for me.  

Brie

check also if the DB schemes have any sort of advice service.  my DC scheme had another hour available and was incredibly helpful covering the complexities of my several pensions including the one not based in the UK.

Thrugelmir

Might as well live off your inheritance and defer your pensions until a later date. Taking a pension early comes at a cost. In an era of poor investment returns provides a degree of comfort. 

HIA

Thrugelmir said:

Might as well live off your inheritance and defer your pensions until a later date. Taking a pension early comes at a cost. In an era of poor investment returns provides a degree of comfort. 

Surely depends how long I live. Just been through a bereavement of a family member of my own age which has made me reasses. I know what you mean but I will also get my oap at 67. I will need to gather the pension projections and get advice about when to take them.

ussdave

For USS it'll be close to cost neutral re taking it earlier or later.  Personally I'd continue to live off savings a little longer (until 60) before drawing the USS.  I wouldn't go longer than that as it's likely that some of your USS pension is payable without actuarial reduction at 60 and USS do not offer revaluation if you defer past your NRA.

As others have mentioned, the commutation rates for USS are poor so it's likely that your best option is to take the standard tax free lump sum of 3x your pension and the rest as normal.  Do you have any money in your Investment Builder?  If you do, there is an opportunity to take additional tax-free cash.

I can't comment on the other pension I'm afraid.

Keep_pedalling

Brie said:

Are you likely to need care at some point?  In which case having a lump sum will not necessarily be an advantage.  

Only if you think relying on a LA to fund your care is a good idea. Funding will only be provided if you get decrepit enough to get past the funding panel and the choices of care home they are willing to fund is limited.

There are good reasons to minimise the lump sum but IMO this is not a good one.

marycanary

Keep_pedalling said:

Brie said:

Are you likely to need care at some point?  In which case having a lump sum will not necessarily be an advantage.  

Only if you think relying on a LA to fund your care is a good idea. Funding will only be provided if you get decrepit enough to get past the funding panel and the choices of care home they are willing to fund is limited.

There are good reasons to minimise the lump sum but IMO this is not a good one.

Totally agree, I work for the council and would not trust them to sort out my care. I want the best I can afford if I become so frail and vulnerable I need care, not the cheapest the council can negotiate.  

Albermarle

marycanary said:

Keep_pedalling said:

Brie said:

Are you likely to need care at some point?  In which case having a lump sum will not necessarily be an advantage.  

Only if you think relying on a LA to fund your care is a good idea. Funding will only be provided if you get decrepit enough to get past the funding panel and the choices of care home they are willing to fund is limited.

There are good reasons to minimise the lump sum but IMO this is not a good one.

Totally agree, I work for the council and would not trust them to sort out my care. I want the best I can afford if I become so frail and vulnerable I need care, not the cheapest the council can negotiate.  

It always surprises me when you see threads/posts where people are wanting to avoid care costs, but have given little thought to what the implications are.

NedS

HIA said:

Thrugelmir said:

Might as well live off your inheritance and defer your pensions until a later date. Taking a pension early comes at a cost. In an era of poor investment returns provides a degree of comfort. 

Surely depends how long I live. Just been through a bereavement of a family member of my own age which has made me reasses. I know what you mean but I will also get my oap at 67. I will need to gather the pension projections and get advice about when to take them.

You won't care if you are dead, but you may care a lot if you live to be 100.

From a financial perspective, it comes down to whether you think you can invest your inheritance and beat the cost of actuarial reduction from taking your pension(s) early (normally around 5% per year, index-linked). Given your recent performance with your ISA and SIPP, how confident do you feel?