Defined benefit pension

daveyjp

Mousey66 said:

jimi_man said:

There must be something missing here? £7500 plus £1200 a year is a reasonably valuable sum. Is it index linked? And what age can you take it?

If it’s index linked then to me, being willing to throw that away for £20k possibly after taxes, is bordering on insane. A reasonable lifespan of collecting the pension plus the lump sum, could easily be £50k. 

How much left is on your mortgage and how much do you pay per month? When is it due to finish?

I can take it now as I’m over 55. 1,200 per year isn’t much a month though. It’s actually a bit less than that I think 1,131.
so less than £100 a month, £25 a week. Hardly worth having when I could potentially take less than 30k, ok it could end up being 20k, no one knows yet, I owe 18k on our mortgage with 7 years left. So if I pay half it helps a lot now when it’s going to be needed.

£1200 may not sound much, but consider what you have to spend which costs at least £1200 (Council Tax being the obvious one) and that increases every year, as will your £1200.

Spend the lump sum and your £1200 isn't there to spend on an ever increasing Council Tax bill.

Remortgaging will be cheaper in the long run and you could borrow extra for immediate spend.

Mousey66

If I wait until nearer the time my current fixed rate ends to take this lump sum and pension, will the pension figures change? It’ll probably be another 4 months.

Dazed_and_C0nfused

Mousey66 said:

If I wait until nearer the time my current fixed rate ends to take this lump sum and pension, will the pension figures change? It’ll probably be another 4 months.

Highly likely to yes, if you are taking it before the normal pension age any reduction for getting it paid for a longer period would normally be slightly less.

Mousey66

Dazed_and_C0nfused said:

Mousey66 said:

If I wait until nearer the time my current fixed rate ends to take this lump sum and pension, will the pension figures change? It’ll probably be another 4 months.

Highly likely to yes, if you are taking it before the normal pension age any reduction for getting it paid for a longer period would normally be slightly less.

I’m probably better waiting a few months then, as it’s mainly the mortgage payments increasing I’m concerned about. So if the lump sum and annual amount would increase by then, it could be worth the wait.

[Deleted User]

Also, but I'm not sure. It may still have death benefits upon your death for your spouse (unless you don't get them now you've left Tesco). They were quite good benefits too 

Mousey66

[Deleted User] said:

Also, but I'm not sure. It may still have death benefits upon your death for your spouse (unless you don't get them now you've left Tesco). They were quite good benefits too 

I’ve just read through the paperwork and it does increase each year with inflation, and my partner would receive a smaller pension if I pop my clogs before him.
so I think it’s probably best to hang fire a few more months.

p00hsticks

Mousey66 said:

ImDoingItForMe said:

Also, but I'm not sure. It may still have death benefits upon your death for your spouse (unless you don't get them now you've left Tesco). They were quite good benefits too 

I’ve just read through the paperwork and it does increase each year with inflation, and my partner would receive a smaller pension if I pop my clogs before him.

You use the term 'partner' rather than 'spouse' or 'civil partner'.

If you are not married or in a civil partnership, then confirm if the pension scheme will still pay out to them in the event of your death and ensure that you meet any conditions. Some old-fashioned ones still only pay out to spouses. Others recognise partnerships that have not been formalised, but only if the employee has completed a form prior to their demise informing them of who they consider their partner.

Mousey66

Good point I’ll look into it. I do think he was named when I got divorced and changed the name of a beneficiary on the pension.
Thanks for pointing this out though 😊

cloud_dog

Mousey66 said:

jimi_man said:

There must be something missing here? £7500 plus £1200 a year is a reasonably valuable sum. Is it index linked? And what age can you take it?

If it’s index linked then to me, being willing to throw that away for £20k possibly after taxes, is bordering on insane. A reasonable lifespan of collecting the pension plus the lump sum, could easily be £50k. 

How much left is on your mortgage and how much do you pay per month? When is it due to finish?

I can take it now as I’m over 55. 1,200 per year isn’t much a month though. It’s actually a bit less than that I think 1,131.
so less than £100 a month, £25 a week. Hardly worth having when I could potentially take less than 30k, ok it could end up being 20k, no one knows yet, I owe 18k on our mortgage with 7 years left. So if I pay half it helps a lot now when it’s going to be needed.

Hi...I think you have potentially changed your thoughts on what you might do now, but I was just going to comment that if you only have £18k (??) remaining then you may only incur an additional cost of £20pm - £25pm when your current deal comes to an end (assumption of a current IR of 1.5% going to 5% in April).

Mousey66

cloud_dog said:

Mousey66 said:

jimi_man said:

There must be something missing here? £7500 plus £1200 a year is a reasonably valuable sum. Is it index linked? And what age can you take it?

If it’s index linked then to me, being willing to throw that away for £20k possibly after taxes, is bordering on insane. A reasonable lifespan of collecting the pension plus the lump sum, could easily be £50k. 

How much left is on your mortgage and how much do you pay per month? When is it due to finish?

I can take it now as I’m over 55. 1,200 per year isn’t much a month though. It’s actually a bit less than that I think 1,131.
so less than £100 a month, £25 a week. Hardly worth having when I could potentially take less than 30k, ok it could end up being 20k, no one knows yet, I owe 18k on our mortgage with 7 years left. So if I pay half it helps a lot now when it’s going to be needed.

Hi...I think you have potentially changed your thoughts on what you might do now, but I was just going to comment that if you only have £18k (??) remaining then you may only incur an additional cost of £20pm - £25pm when your current deal comes to an end (assumption of a current IR of 1.5% going to 5% in April).

Yeah I think I’m pretty much decided. And the £100 or so extra a month I get from the pension will help towards the extra on the mortgage. So not all bad!