Private pension payments
in Pensions, annuities & retirement planning
10 replies 298 views
Is it better financially to get pai annually or monthly in arrears?
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For drawdown it makes no difference. For annuities, it can make a difference but there are other adjustments in there (such as with or without proportion). Advance tends to give a fractionally lower annuity rate.
Scheme pensions often don't give the choice but theoretically, they could.
From contracted out period.
1) If you take an annual payment in April you will be taxed as if you will received 12x that much in the year. You can claim it back but it is extra work. Being paid in March is less work as it taking the money monthly.
2) Assuming this is a DC scheme drawdown and not an option on a DB scheme. Generally the longer you leave the money in your investments the more it will grow. However in a bad year, taking your payment at the end might mean you see a loss you wouldn't have and that hurts.
3) Can you budget, this is a big consideration for me, I budget well on a monthly basis but can I switch to annualised budgeting. No idea but I might decide not to take the challenge.
4) If this was a DB scheme I'd take it monthly, mainly because of point 1 and point 3.
you said on another thread that your state pension was less than the full ammount so if that is your only income then tax will not be a problem.