Pros/Cons Taking LGPS Lump Sum v Monthly Payment

Ms_Chocaholic

Hello

I have just had my figures for my pension payout and am struggling as to whether I take a larger lump sum and a reduced monthly payment.  Our mortgage is paid off, no loans/debts of any kind and we have a decent amount of savings.  Husband also receives an Army pension so with both his and mine we have just shy of what we were earning.

Please let me know your thoughts.

Ms Choc

Dazed_and_C0nfused

Ms_Chocaholic said:

Hello

I have just had my figures for my pension payout and am struggling as to whether I take a larger lump sum and a reduced monthly payment.  Our mortgage is paid off, no loans/debts of any kind and we have a decent amount of savings.  Husband also receives an Army pension so with both his and mine we have just shy of what we were earning.

Please let me know your thoughts.

Ms Choc

Some figures would be useful.

Giving up £1,000 of your annual pension in return for £50k would be more than tempting.

But getting say £12k less so.

Sarahspangles

The commutation rate for LGPS is pretty poor at 1:12, so unless you have a need for the capital upfront it’s probably better to take the pension, particularly as that’s index linked.

saucer

Unless you are in the fortunate position of being a higher rate tax payer when retired, which might make bigger TFLS a bit more attractive. 

Ms_Chocaholic

Dazed_and_C0nfused said:

Ms_Chocaholic said:

Hello

I have just had my figures for my pension payout and am struggling as to whether I take a larger lump sum and a reduced monthly payment.  Our mortgage is paid off, no loans/debts of any kind and we have a decent amount of savings.  Husband also receives an Army pension so with both his and mine we have just shy of what we were earning.

Please let me know your thoughts.

Ms Choc

Some figures would be useful.

Giving up £1,000 of your annual pension in return for £50k would be more than tempting.

But getting say £12k less so.

I've worked a lot of years part-time so it's not huge amounts but I'll get the figures and post here.

huw01

Did you have any service pre 2008, I have and I have an automatic lump sump which is paid regardless. On my scheme I think I get around 18k automatic lump sum due to pre 2008 membership and then I can decided to take more of a lump sum but that then affects the yearly pension

Ms_Chocaholic

Here's the figures:

Standard Pension Benefits

Annual pension - £10,854

Lump sum - £19,209

Maximum Tax Free Lump Sum:

Annual Pension - £8,006

Lump Sum - £53,378

or somewhere in between.

I currently earn around £1,062 pcm (part-time) so not much less for the first option.

We've already helped our daughter with funds for their property.

Ms_Chocaholic

huw01 said:

Did you have any service pre 2008, I have and I have an automatic lump sump which is paid regardless. On my scheme I think I get around 18k automatic lump sum due to pre 2008 membership and then I can decided to take more of a lump sum but that then affects the yearly pension

Yes I have service pre-2008, thanks.  Are you wondering too how mcuh lump sum to take?

Nebulous2

It's a gamble on how long you will live. 12:1 is a poor rate, so if you live a long time you will lose out. Often the advice is to take it if you need it for something specific, but not if you don't. 

I have a LGPS pension, and as an anomaly of my own circumstances I didn't have an automatic lump sum. I chose not to take one at all, and took the maximum pension. 

I've just had the second of two decent inflation-linked rises to my pension, and I've no regrets about not taking a lump sum at all. 

KittyS

I just asked the same question the other day.  I had a deferred pension last year where I took the lump sum.  Then just been made redundant and got a small pension or lump sum.  So decided to go for the monthly sum as have no debts.  See what would work for you

KittyS

Can I ask what the two figures are for?