NHS Scotland 95 section

Hretire60

I know that this maybe covered previously but looking for a independent perspective.

I am due to retire after 36 years service with the NHS.  I am in the 1995 section so get a pension and an automatic lump sum.   I also have the opportunity to return and work 16 hours per week. The commutation is 12:1.

What are the pros and cons of commuting some of my pension for a larger lump sum?  I am 60.

NedS

The downside for you is that your commutation rate is very poor - you are only getting £12 of additional lump sum for every £1 of index-linked pension you give up. This is typical of public service schemes, so you are not alone. A more common commutation factor in private sector schemes may be twice that.

There are lots of threads here on the forum discussing the pros and cons.

Hretire60

Thanks,  the previous threads are quite difficult to follow, but I will try and follow them

Flugelhorn

The general advice seems to be not to take any more as a lump sum from the NHS 95 scheme unless you are near the LTA and taking more will keep you below the level.  Of course all depends on the individual and their circumstances

Dazed_and_C0nfused

What are the pros and cons of commuting some of my pension for a larger lump sum? I am 60.

If you aren't desperate for the money it's likely to be a poor choice financially to take the extra lump sum

Say you give up £1,000 of your pension.

You get an immediate £12,000 tax free lump sum.

But in year one of your pension you miss out on £1,000 of pension income (maybe £790/800/810 net of tax).

With the annual inflation increase that £1,000 might become £1,080 in year two.

And so on.  So by year 12 you are likely to be missing out on maybe £1,300/year.

And you could be retired for another 30 years after that 🙂

Stubod

The general advice is to only take the minimum lump sum, (unless you have health issues that will reduce your life expectancy..)