Bold leap into retirement

katejo

https://forums.moneysavingexpert.com/discussion/comment/81933247#Comment_81933247

The pension needs to cover me for 4 years until I get the State pension. The commutation rate is just over 18 (based on my pension estimate not the final document). The SAUL annual increase is linked to the CPI (last update April 2025). I am a standard rate tax payer and have no particular expectation to live beyond/below the average. I think I am going to take about 1/3 or 1/2 the basic lump sum offered.

bjorn_toby_wilde

I took the lump sum on one of my pensions but only because the commutation rate was very good and the increases in payment were poor (approximately 50% with no increase and the rest capped at 2.5%).

I don’t regret taking it but if the inflation proofing had been better I wouldn’t have done so.

pterri

https://forums.moneysavingexpert.com/discussion/comment/81933230#Comment_81933230

when i start my DB i'll be taking the full DB income, ive got AVS's that will provide a decent pot of funds, i agree, for me the security of an index linked income is great. one thing to consider though, my indexation is limited to 5% RPI max (normally runs about 1% bove CPI so thats nice). it does mean that it my drop in real terms if so if, for example, a ludicrous orange president decides to ignite the whole of the middle east then i'll loose out. On my scheme if you joined before 1989 then the increase was RPI UNCAPPED! still, im glad ive got a DB at all.

pterri

https://forums.moneysavingexpert.com/discussion/comment/81933247#Comment_81933247

just read this after i posted, agree with all of this. my comutation rate is poor and my inflation cap is 5% RPI so not too bad.

cloud_dog

I've decided to take my DB scheme early and to take the full PCLS.

Initially I wasn't planning on a) taking it early, and b) taking the full PCLS, but after months of running numbers I've decided to take it early with the full PCLS.

The reasons were a capped increases ( 2.5%) and a reasonable commutation rate (19). Additionally, and I don't know if this makes sense to all the real 'number' people out there but, the additional income if taken would have been taxed, so on an untaxed (invest the full PCLS in ISAs etc and use it's income) basis the commutation figure is higher.

Additionally, additionally with the Personal Allowance continuing to be frozen for a little longer, all of this tipped it for us to take the full PCLS.

pterri

https://forums.moneysavingexpert.com/discussion/comment/81933798#Comment_81933798

I'll be just over the PA when my SP kicks in, its an important consideration. I'll have a chunky AVC amount that i will be feeding into my ISA from DB age (60) so the ISA allowance is spoken for. for that reason i may deplete my SIPP more, even if i pay some 20% tax, as i want to access it, putting the excess into my ISA, before state pension age where it will see a 40% deduction - if that makes sense.

cloud_dog

@pterri being a HRT payer once SP kicks in was another consideration. 👍

katejo

I have just got my final pension statement from SAUL this morning. Still thinking about how much to take as a lump sum but probably about a quarter to a third of the amount offered. I have reached the max for my ISA and already have arranged a transfer into it for next tax year. Think I made a mistake with calculation of the commutation factor. I need to do it again.

michaels

https://forums.moneysavingexpert.com/discussion/comment/81933798#Comment_81933798

Is the indexation before putting the pension into payment also capped as if not that might be a further factor to weigh into your calculations - sorry

cloud_dog

https://forums.moneysavingexpert.com/discussion/comment/81934165#Comment_81934165

It is capped in payment.