Teachers' pension - lump sum vs higher pension

El_Torro

i don’t know exactly what the IFA said / meant but maybe they were taking state pension into account. This lump sum doesn’t need to last very long before the state pension kicks in. 

Albermarle

rnj said:

Personally I'd take the lump sum - but this is my own circumstances. It would take a number of years to get the equivalent lump sum, anything could happen in this time.

It would take 12 years to get it back, and that is assuming that the lump sum was invested to keep up with inflation.
If the lump sum was spent and the pension increased in line with inflation then it would be more like 10 years.
The OP is 63 and on average will live another 20 years. Could be less or more. As they are a teacher ( non manual work and educated) this would be a positive sign for living longer than average, as would having guaranteed income over and above the state pension

atush

If you have savings and dont need the cash, take the higher pension.

And dont go back to that advisor.

Silvertabby

The TPS/public sector commutation rate of 1:12 is indeed p. poor.  Especially when you consider that the pension given up would be fully index linked (CPI).

That said, over 90% of LGPS retirees take the maximum tax free cash, and I suspect that TPS members aren't much different.  

stuhse

I'd suggest the FA had an investment in mind for your 47k that would have earned him a nice commission.

rnj

Albermarle said:

rnj said:

Personally I'd take the lump sum - but this is my own circumstances. It would take a number of years to get the equivalent lump sum, anything could happen in this time.

It would take 12 years to get it back, and that is assuming that the lump sum was invested to keep up with inflation.
If the lump sum was spent and the pension increased in line with inflation then it would be more like 10 years.
The OP is 63 and on average will live another 20 years. Could be less or more. As they are a teacher ( non manual work and educated) this would be a positive sign for living longer than average, as would having guaranteed income over and above the state pension

Understood. This is why i mentioned my own circumstances. plus id rather money when younger than 70+.

Thought about it a bit more, the income would be taxed assuming tfa used up so would take more than 12 yrs imo. I think in normal times it is quite easy to beat inflation. My rough calcs show 81.5 is the age you'd benefit from taking the higher income.