Pension Plan Correct?

236dave

dunstonh said:

I also have a final salary scheme which is projected to be worth £200k at age 65. (I'd take 25% tax free, with a £7.5k / yr income @ 65)

Are you sure it is a defined benefit scheme?  DB schemes do not have projected values.   And you cannot take 25% tax free cash from a DB scheme as there is no value to apply the 25% to.   Instread they use a different method of calculation to work out the tax free cash.

I would continue with this method upto age 65, when I'd have exhausted my uncrystalised pot, and will then use some cash savings and also my final salary pension, until I reach 67.

And what happens after 67?

After 67 .....
I have a detailed spreadsheet which shows that I can maintain the level of income, ie £33.5k/yr + each year a bit of growth to the age of 80, then reduces by 10% to the age of 90, if I ever live that long???? when the pension runs dry. (I know todays inflation rate is an issue) If by some miracle I live beyond 90 then we have equity in our house to use.

xylophone

Have you and your wife obtained state pension forecasts?

https://www.gov.uk/check-state-pension

Albermarle

236dave said:

bluearmy18 said:

A friend has a DB scheme, and he has an app on his phone. His app is personalised with his salary details.  He was showing me that he can take a greater amount of cash up front and have a smaller amount of monthly salary...  I wonder if that is what the OP meant by taking a lump sum & having a smaller monthly amount?

Yes I have statetments that tell me that I can take 25% of its value @ age 65, as a tax free lump sum, but it reduces my income by 25%, which im ok with.
ie, @ age 65 predicted value =£200k, which would give a £10k/annum income
or I'm allowed to take £50k tax free and a reduced income of £7.5k/annum, which I plan to do!

If you take the lump sum and divide it by the pension being given up, you get something called the 'commutation factor' 
Yours is 20, which is not particularly good or bad. It depends to some extent and how good the pension  being given up is.
For example , how is it linked to inflation, spousal benefit etc.
Having said that most people take the lump sum even when the commutation factor is only 12, like with some public sector schemes. The attraction of £££ today is too strong , however bad a deal it is .

236dave

xylophone said:

Have you and your wife obtained state pension forecasts?

https://www.gov.uk/check-state-pension

Yes I have the full amount of years contribution, whereas my wife's was short.  I bought 3 years worth for her some time ago, and plan on buying the remaining few years to get her full state pension.

236dave

Albermarle said:

236dave said:

bluearmy18 said:

A friend has a DB scheme, and he has an app on his phone. His app is personalised with his salary details.  He was showing me that he can take a greater amount of cash up front and have a smaller amount of monthly salary...  I wonder if that is what the OP meant by taking a lump sum & having a smaller monthly amount?

Yes I have statetments that tell me that I can take 25% of its value @ age 65, as a tax free lump sum, but it reduces my income by 25%, which im ok with.
ie, @ age 65 predicted value =£200k, which would give a £10k/annum income
or I'm allowed to take £50k tax free and a reduced income of £7.5k/annum, which I plan to do!

If you take the lump sum and divide it by the pension being given up, you get something called the 'commutation factor' 
Yours is 20, which is not particularly good or bad. It depends to some extent and how good the pension  being given up is.
For example , how is it linked to inflation, spousal benefit etc.
Having said that most people take the lump sum even when the commutation factor is only 12, like with some public sector schemes. The attraction of £££ today is too strong , however bad a deal it is .

The pension does give death benefit and my wife would get 50% of income if I passed away first.  But is a fixed pension, ie doesnt rise with cost of living.

Albermarle

236dave said:

Albermarle said:

236dave said:

bluearmy18 said:

A friend has a DB scheme, and he has an app on his phone. His app is personalised with his salary details.  He was showing me that he can take a greater amount of cash up front and have a smaller amount of monthly salary...  I wonder if that is what the OP meant by taking a lump sum & having a smaller monthly amount?

Yes I have statetments that tell me that I can take 25% of its value @ age 65, as a tax free lump sum, but it reduces my income by 25%, which im ok with.
ie, @ age 65 predicted value =£200k, which would give a £10k/annum income
or I'm allowed to take £50k tax free and a reduced income of £7.5k/annum, which I plan to do!

If you take the lump sum and divide it by the pension being given up, you get something called the 'commutation factor' 
Yours is 20, which is not particularly good or bad. It depends to some extent and how good the pension  being given up is.
For example , how is it linked to inflation, spousal benefit etc.
Having said that most people take the lump sum even when the commutation factor is only 12, like with some public sector schemes. The attraction of £££ today is too strong , however bad a deal it is .

The pension does give death benefit and my wife would get 50% of income if I passed away first.  But is a fixed pension, ie doesnt rise with cost of living.

That is not good at all, so in that case taking the lump sum looks the best bet .