Not taking lump sum..

sheslookinhot

Stubod said:

If you don't really need a cash lump sum and health is not an issue, I would always recommend not taking it. Better to have a higher monthly income IMHO?

and pay higher rate tax, and then also get a state pension taxed at 40%. Better to minimise HRT if you can. 

Stubod

sheslookinhot said:

Stubod said:

If you don't really need a cash lump sum and health is not an issue, I would always recommend not taking it. Better to have a higher monthly income IMHO?

and pay higher rate tax, and then also get a state pension taxed at 40%. Better to minimise HRT if you can. 

..yes, but this does not apply if you only have an £8k pension as per the OP??

SMcGill

I posted a similar question recently as my USS DB pension gives a TFLS as the default option but I don’t need it. One suggestion made to me was to take the TFLS and buy an annuity with it. Might be worth you looking into this as an option?

DullGreyGuy

Brie said:

An IFA I talked to claimed that there was more to be made by investing the lump sum then what I might get over the life of the pension if I didn't take it.  Not sure how valid that is.  The only obvious value of a lump to me was to tidy up my finances in general and to get me through to my state pension comfortably.  

That will depend very much on your personal pension, DB schemes can vary massively over what escalations they pay

Nebulous2

I had been paying into the LGPS for a long time, but due to transferring from one scheme to another I didn't have an automatic lump sum. I could have commuted some of my pension to get one, but at 12:1 I didn't think the rate was very good. 

With a 10.1% increase on my pension from April next year I certainly don't think I made the wrong choice. 

We have a cash buffer, from relocating, so can afford one-off big expenditure should we so choose. 

Pensioner2023

Thanks everybody.
Good to get different viewpoints.
My nhs pension is 8k approx and my state pension  is 9.5k... so I feel I should just go with that and use my private pension as a buffer when I (hopefully, eventually) need it.
I really appreciate your input.
My thanks again.

kassy64

I took my Civil Service pension with the maximum lump sum (I know a lot will frown upon that), but it meant I was able to retire early at 58, I still get a decent CPI linked pension of about £18k per year plus have a very tidy sum currently earning me about £500 per month in interest (yes i know rates won't be this high for remainder of my life). Plus, I thought do I need the extra monthly income in my latter years as by then I will also be getting the state pension and will probably have more than I need at that time. Also, you need a Crystral ball to forecast your health and how long you will be on this planet. I calculated that I would be in deficit (lump sum v pension) if I live beyond about 74, but that doesn't account for the interest I am earning. As I said if I hadn't taken the max lump sum I would probably still be working and getting up at 5am in the morning - no thanks done that for 40+ years and had enough of it.

Qyburn

kassy64 said:

I took my Civil Service pension with the maximum lump sum (I know a lot will frown upon that), but it meant I was able to retire early at 58, I still get a decent CPI linked pension of about £18k per year plus have a very tidy sum currently earning me about £500 per month in interest

That's a huge amount of interest, is it actually more than you would have got from the pension if you hadn't taken the lump sum?

kassy64

Qyburn said:

kassy64 said:

I took my Civil Service pension with the maximum lump sum (I know a lot will frown upon that), but it meant I was able to retire early at 58, I still get a decent CPI linked pension of about £18k per year plus have a very tidy sum currently earning me about £500 per month in interest

That's a huge amount of interest, is it actually more than you would have got from the pension if you hadn't taken the lump sum?

Definitely yes, but obviously it assumes I don’t touch or use any of the lump sum, plus I understand that these relatively high interest rates won’t last forever. When I retired my aim was to get about £200 interest per month but since rates have shot up. I have a few fixed rate accounts and ISAs set up earning 3.5 to 4.5%. Obviously I will have to pay tax at some point but have put some in my wife’s name to limit the tax hit.