re. initial lump sum treatment for those on DB pensions

katejo

I am thinking of retiring next summer and will get my DB pension and lump sum. I won't have any debts to pay (mortgage paid off)  and already have a stocks and shares ISA/investment fund . I am curious to know what those recently retired have initially done with their lump sum? I will want to keep some accessible to treat myself to more travel/leisure activities to bridge the income gap between my pension income and my current salary but I am wondering about the best way to handle it.

Brie

I paid a few minor debts and then put the rest in a high interest savings account as I knew that our income wouldn't be sufficient until a few other pensions kicked in.  So just been moving the money out of the savings account into our current account to pay things as they come along.  

tacpot12

My partner has put her lump sum into a cash ISA, fixed rate bond, and an ordinary (but high-interest) savings account. She's very cautious so didn't want to invest any of it. 

Somebody

You don't have to take the lump sum, which will mean you get a higher annual pension with (some) inflation protection specific to your scheme rules.  You can take between zero and the maximum lump sum.  ask your DB administrator for quotes. 

cfw1994

Somebody said:

You don't have to take the lump sum, which will mean you get a higher annual pension with (some) inflation protection specific to your scheme rules.  You can take between zero and the maximum lump sum.  ask your DB administrator for quotes. 

Not always.
I have a Council DB scheme from my first role due to start later this year, & I have to take a minimum lump sum with it.
Or so their benefit projector site tells me.  It shows I can increased it, but not decrease it. 

🤷‍♂️

I plan to spend mine on booze, birds, and fast cars. The rest I might squander 🤪
©GeorgeBest 🤣

Albermarle

Somebody said:

You don't have to take the lump sum, which will mean you get a higher annual pension with (some) inflation protection specific to your scheme rules.  You can take between zero and the maximum lump sum.  ask your DB administrator for quotes. 

I only had a choice of full lump sum available, or no lump sum at all.
I took the latter option as it meant a higher guaranteed pension, and I had enough cash/DC pension anyway.

Be aware that some DB pension administrators are pretty hopeless. A simple request for a range of options could cause months of delays.

katejo

Somebody said:

You don't have to take the lump sum, which will mean you get a higher annual pension with (some) inflation protection specific to your scheme rules.  You can take between zero and the maximum lump sum.  ask your DB administrator for quotes. 

Yes I know that. There are 3 options. I will probably take the middle one. 

RetiredTaz

Somebody said:

You don't have to take the lump sum, which will mean you get a higher annual pension with (some) inflation protection specific to your scheme rules.  You can take between zero and the maximum lump sum.  ask your DB administrator for quotes. 

Unfortunately, some schemes don't have the option to take zero lump sum. I took the minimum I could and put it into ISA's spanning two tax years. 

katejo

RetiredTaz said:

Somebody said:

You don't have to take the lump sum, which will mean you get a higher annual pension with (some) inflation protection specific to your scheme rules.  You can take between zero and the maximum lump sum.  ask your DB administrator for quotes. 

Unfortunately, some schemes don't have the option to take zero lump sum. I took the minimum I could and put it into ISA's spanning two tax years. 

I already have an ISA with the maximum amount paid in annually so I can't do that. 

chubsta

I took my lump sum and put it all into a savings account which gives monthly interest (5.03%) which all adds to the money available each month - for various complicated reasons this interest is not taxed either so is a nice little income. I plan to start dipping into it at the rate of about 1/25th of the original total per year in a few years when I hit 60 and when combined with my monthly pension and state pension when I hit 67 (as long as I am not 'means-tested' out of that!) I will be nicely off in my twilight years...

katejo

chubsta said:

I took my lump sum and put it all into a savings account which gives monthly interest (5.03%) which all adds to the money available each month - for various complicated reasons this interest is not taxed either so is a nice little income. I plan to start dipping into it at the rate of about 1/25th of the original total per year in a few years when I hit 60 and when combined with my monthly pension and state pension when I hit 67 (as long as I am not 'means-tested' out of that!) I will be nicely off in my twilight years...

Thanks. This is the sort of thing which I am thinking of doing. I am curious as to why yours isn't taxed (thought you don't need to answer that).