DB question-lump sum or full pension ?

Albermarle

Farside71 said:

RogerPensionGuy said:

If you wanted to potentially leave some cash for others after your day, maybe getting tax-free cash is an effective way to augment stuff as you always have the tax-free available, but maybe you pass it on if suitable. 

From speaking to work colleagues who have DB pensions in payment this seems to be quite a common reason among them and their ex workmates, as the pension is perceived to die with them so they take money out to preserve it in case they die early.  I'm not saying it's the right thing to do but for people who have worked hard their whole lives it makes a lot of sense psychologically.

I think in reality the large majority take the lump sum, without giving it a huge amount of thought. The chance to just get their hands on a big lump of dosh is enough reason for most. 

C_Mababejive

Thanks all, well i believe the pension in payment is segmented into two or three chunks each increasing annually at different rates. I dont have the finer details on that but from what i understand, the biggest chunk increases fully exposed to rpi.

I am also on the brink of qualifying for the full new state pension. I already have ,,ermm,, significant funds.

WYSPECIAL

Marcon said:

If you aren't married, there's unlikely to be any benefit from the spouse's pension attached to your DB pension. For the record/other people reading this thread, be aware that if you take tax free cash, it's only your own pension which is impacted - survivors' pensions are calculated on the basis that you didn't take any cash, whatever choice the member makes.

Would that not differ accordingly to the rules of the individual scheme? My survivors pension was reduced as a result of taking a TFLS. Not being married was one of the factors  that swayed me towards taking a TFLS as I have no need for a survivors pension.

Pat38493

C_Mababejive said:

Thanks all, well i believe the pension in payment is segmented into two or three chunks each increasing annually at different rates. I dont have the finer details on that but from what i understand, the biggest chunk increases fully exposed to rpi.

I am also on the brink of qualifying for the full new state pension. I already have ,,ermm,, significant funds.

That sounds like my DB pension - you should be able to ask them for a breakdown or factsheet of the different tranches and the increase rules before and after you start drawing the pension.  In my case, there are 2 parts that will increase with annual RPI capped 5%, and another part which is the same but has a minimum 3% increase even if RPI is less than 3%.

dunstonh

Transfer values are no longer an option thanks to Liz Truss

Liz Truss has nothing to do with your transfer values.

CETVs had already fallen a long way before she was Prime Minister and they have continued to fall to below what they were when she was Prime Minister.

CETVs were artificially high because of the measures that took place to soften the credit crunch.    Over 2022 and 2023 they have fallen back to their more typical historic range.

NlghtOwl

Ask about an enhanced pension if no survivor pension required, as it should increase your pension slightly.
why are you only planning for 20years, someone aged 60 of reasonable health should be planning to live until 90 or 95 at the earliest. Good luck 

C_Mababejive

NlghtOwl said:

Ask about an enhanced pension if no survivor pension required, as it should increase your pension slightly.
why are you only planning for 20years, someone aged 60 of reasonable health should be planning to live until 90 or 95 at the earliest. Good luck 

That sounds a bit optimistic according to what ive seen so far ? 

Albermarle

NlghtOwl said:

Ask about an enhanced pension if no survivor pension required, as it should increase your pension slightly.
why are you only planning for 20years, someone aged 60 of reasonable health should be planning to live until 90 or 95 at the earliest. Good luck 

I think the OP is being a bit pessimistic about longevity but you are maybe a bit optimistic.
The average life expectancy of a 60 year old man is about 23years.
If you have good health, not too many bad habits, money, good education, live in a nice area, married etc then you would hope to be in the 50% who live longer than average. I think the chance of reaching 90 is in the 10 to 15% region. and obviously a lot less to reach 95. 

Linton

Albermarle said:

NlghtOwl said:

Ask about an enhanced pension if no survivor pension required, as it should increase your pension slightly.
why are you only planning for 20years, someone aged 60 of reasonable health should be planning to live until 90 or 95 at the earliest. Good luck 

I think the OP is being a bit pessimistic about longevity but you are maybe a bit optimistic.
The average life expectancy of a 60 year old man is about 23years.
If you have good health, not too many bad habits, money, good education, live in a nice area, married etc then you would hope to be in the 50% who live longer than average. I think the chance of reaching 90 is in the 10 to 15% region. and obviously a lot less to reach 95. 

Where did you get your data from?

see https://www.ons.gov.uk/peoplepopulationandcommunity/healthandsocialcare/healthandlifeexpectancies/articles/lifeexpectancycalculator/2019-06-07

It shows a  life expectancy of a 60 year old male now to be 24 years with a 25% chance of reaching 92, a 10% chance of reaching 96 and a 3.3% chance of reaching 100.

So for planning purposes it seems to me that assuming one lives until 95 would be reasonably prudent andmuch earlier would be rather risky.  Pn the other hand if you are insisting on a 100% SWR pass rate it would be illogical not to plan for living until over 100.

DT2001

Linton said:

Albermarle said:

NlghtOwl said:

Ask about an enhanced pension if no survivor pension required, as it should increase your pension slightly.
why are you only planning for 20years, someone aged 60 of reasonable health should be planning to live until 90 or 95 at the earliest. Good luck 

I think the OP is being a bit pessimistic about longevity but you are maybe a bit optimistic.
The average life expectancy of a 60 year old man is about 23years.
If you have good health, not too many bad habits, money, good education, live in a nice area, married etc then you would hope to be in the 50% who live longer than average. I think the chance of reaching 90 is in the 10 to 15% region. and obviously a lot less to reach 95. 

Where did you get your data from?

see https://www.ons.gov.uk/peoplepopulationandcommunity/healthandsocialcare/healthandlifeexpectancies/articles/lifeexpectancycalculator/2019-06-07

It shows a  life expectancy of a 60 year old male now to be 24 years with a 25% chance of reaching 92, a 10% chance of reaching 96 and a 3.3% chance of reaching 100.

So for planning purposes it seems to me that assuming one lives until 95 would be reasonably prudent andmuch earlier would be rather risky.  Pn the other hand if you are insisting on a 100% SWR pass rate it would be illogical not to plan for living until over 100.

If it is important in relation to the decision then working out a more accurate life expectancy might be worthwhile. Presumably this could be achieved by a medical MOT combined with Albermarle’s factors (+ income, education, area or - not married etc). As the difference between living in Glasgow and London can be 10 years on/off your expected life it  could be significant.

If the desired income is well below the lower DB, SP and income from other funds it is less relevant.

Maybe the lump sum could be ‘insurance’ against developing a life shortening disease - by that I mean you would access to a lump sum for private medical care or for the bucket list.