Which way to go

Astronut5

I am single 58 and 6 months old and have retired and do not wish to work again.
Own my own house and car outright, no debts.
Cash in the bank and some investments totalling £220k which make around £800 a month net income.
I am living off a drawdown pension at the moment which has £88000 in it and and I draw at the tax threshold of £12570 so I get about £1047 tax free plus the £800 interest which is mostly tax free (£32000) in cash isas.
So I also have a FS pension that pays £12641 plus £84250 cash at 60 (18 months time)
Or if I took it now £11676 plus £77800 cash.
The FS pension rises at 5 percent a year fixed (not up to or more than).
Question is do I take the FS now and preserve the drawdown or wait 18 months?
I don't need much to live on as £1000 a month is plenty to pay all my bills.

El_Torro

I would wait before accessing your DB pension. Especially since it increases at a guaranteed 5% per year. 

Is your £220k invested wisely? You don't say how much you have in investments and how much is in savings. It's important to bear in mind that if a lot of it is in cash then the real value of your savings will drop over time as it probably won't increase as fast as inflation. 

Looks like you're in a good place financially, since your DB pension will be enough to cover your costs, at least for now. Do you know how much state pension you will get? If you don't have enough qualifying years it might be worth buying more before you reach the age you can access it. 

Astronut5

I will get £200 a week state pension.
Taking the FS now will preserve the £88000 in the drawdown, is that not a good thing?
Also I would get at least one 5 percent rise before 60 if I take the FS early and the lump sum early as well to invest.

El_Torro

Astronut5 said:

I will get £200 a week state pension.
Taking the FS now will preserve the £88000 in the drawdown, is that not a good thing?
Also I would get at least one 5 percent rise before 60 if I take the FS early and the lump sum early as well to invest.

Regarding your points about your DB pension, good points on this.

One thing to consider though is that you are currently accessing your DC pension tax free. Once you start taking your DB pension this will no longer be an option for you. So that's 20% income tax off any money removed from the DC pension.

I don't think that either option is particularly bad, just go with what you are happiest with. Assuming your costs don't increase significantly in the future it looks like you'll be OK financially.

Another thing to consider is that stocks have taken a hammering in recent years. You may want to access the DB pension now so that your funds in the DC pension have the chance to grow. Exactly when and how fast they will grow is anybody's guess.

Astronut5

I was considering taking the FS pension and stopping the D.C. pension so my tax position would not change.
I know I would have to take the DC. pension at some time but I don't really need the income from both right now and a 3rd later on from my state pension.

xylophone

I know I would have to take the DC. pension at some time

Not necessarily.

I will get £200 a week state pension.

What exactly does your forecast show?

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

See example here

https://www.which.co.uk/money/pensions-and-retirement/state-pension/your-state-pension-forecast-explained-aHd0S6f725a9

What is the COPE shown on your forecast?

Astronut5

Why would I not take the D.C. pension at some time?
State pension is £200.45, max I can get is £203.85

Marcon

Astronut5 said:

I will get £200 a week state pension.
Taking the FS now will preserve the £88000 in the drawdown, is that not a good thing?

Why is preserving the £88,000 in drawdown a good thing if it comes at the expense of a (permanent) reduction in your FS pension income (the lower starting level means all future increases start from that baseline)?

Astronut5 said:

Also I would get at least one 5 percent rise before 60 if I take the FS early and the lump sum early as well to invest.

You might get a bigger rise depending on the rate of inflation/how your FS pension revalues in deferment. It's worth checking with your scheme if you don't know for certain.

Astronut5

It's 5 percent fixed in deferment and payment.
By my calculations which may be wrong I would lose around 1.5 percent and about £6500 on the cash lump sum.

Bimbly

Astronut5 said:

Why would I not take the D.C. pension at some time?

I suspect Xylophone only meant that you don't have to take your DC pension at any time. Some people prefer to leave extra money in a DC for inheritance purposes, as it falls outside of the estate. 

Astronut5

Oh I see, no I don't intend to leave the money it's just that I don't really need the income from 3 pensions, maybe I should just buy a Porsche.