Defined benefit pension Roche Products - best option advice appreciated

Marineboy1961

Hello I am currently trying to decide on the best option they are as follows 
I have a Roche DB pension and am trying to decide which option is the best to take 
1. Take the full pension at £10,500 per year 
2. Take tax free lump sum of £50,000 and a reduced pension of £7,500 per year 
3. Take a mid point option of £25,000 tax free and a reduced pension of approx £9,000 per year.
Very grateful of any thoughts on this.
Thankyou.

Dazed_and_C0nfused

Marineboy1961 said:

Hello I am currently trying to decide on the best option they are as follows 
I have a Roche DB pension and am trying to decide which option is the best to take 
1. Take the full pension at £10,500 per year 
2. Take tax free lump sum of £50,000 and a reduced pension of £7,500 per year 
3. Take a mid point option of £25,000 tax free and a reduced pension of approx £9,000 per year.
Very grateful of any thoughts on this.
Thankyou.

Do you have any specific need for the PCLS or are you only considering this as you can take some tax free cash?

What inflation protection does your DB pension have once in payment?

The exchange rate doesn't particularly attractive given you could be receiving the pension income for another 30+ years.

Marcon

Marineboy1961 said:

Hello I am currently trying to decide on the best option they are as follows 
I have a Roche DB pension and am trying to decide which option is the best to take 
1. Take the full pension at £10,500 per year 
2. Take tax free lump sum of £50,000 and a reduced pension of £7,500 per year 
3. Take a mid point option of £25,000 tax free and a reduced pension of approx £9,000 per year.
Very grateful of any thoughts on this.
Thankyou.

With zero knowledge of your financial situation or objectives, it's impossible for anyone here to do more than take a running guess!

If you google on 'should I take a take free lump sum from my DB pension' that will give you plenty of links with generic advice on things to consider before making a decision.

Brie

If you have an urgent need for a lump then maybe that's good but you need to balance that out against what you will have to live on for the rest of your life.

If you have parents still climbing everest at 90 I'd say you want to have as high an annual payout a year as possible.  If both parents dropped off their perches in their 50s then you'll may be wanting the biggest lump as you might not expect to be here for the long run.

If you have no other pensions that will also change things.  Have you checked your state pension forecast?

Marineboy1961

Thanks for such a prompt response. 

Inflation protection wise on Roche DB £10,500 pension : 
Non increasing pension fund built up before 6t April 1997  £3619
Increasing fund pension built up before 6 April 1997 £6,999

Bit more background info, I am 63 going on 64 and I asked Roche for an early retirement quotation. If I had waited till 28/1/26 my 65th I would have got £11,500. 

The current offer is early offer request dated from August 2024 at  £10,500 per year, and is open to me if I want it.

Tax free lump sum appears attractive, but I have no desperate need.

I also have £160,000 in DC pots and need to ensure I get best returns from them.

Thankyou for your valuable advice.

Marineboy1961

I also have checked my state pension its due in Nov 2027 £12,500

Sarahspangles

Marineboy1961 said:

Thanks for such a prompt response. 

Inflation protection wise on Roche DB £10,500 pension : 
Non increasing pension fund built up before 6t April 1997  £3619
Increasing fund pension built up before 6 April 1997 £6,999

Bit more background info, I am 63 going on 64 and I asked Roche for an early retirement quotation. If I had waited till 28/1/66 my 65th I would have got £11,500. 

The current offer is early offer request dated from August 2024 at  £10,500 per year, and is open to me if I want it.

Tax free lump sum appears attractive, but I have no desperate need.

I also have £160,000 in DC pots and need to ensure I get best returns from them.

Thankyou for your valuable advice.

The commutation rate for the lump sum is 1 : 16.67. That's not particularly generous.

When you say 'Increasing fund pension' what is the index in use?  If it's a flat 2% or something like that then you would have lost spending power in recent high inflation years.

Marineboy1961

Thanks I have just looked at the documentation and its in line with CPI up to 5% per year 

Brie

So what do you need to live?  £23000 with the SP and full DB or £20000 with SP and the lowest DB?  Must admit looking at it that way it's not a huge difference.  It will come down to what to do with the lump sum - if it's to pay off your mortgage or similar then that will free up more money so make life easier all round.

Get an annuity quote for the DC money just to see what else might be possible.  Not suggesting you get an annuity but at least it will let you know what's possible.  

Marineboy1961

Thanks Brie all pragmatic and very helpful. I will get an annuity quote on the DCs 
kindest regards 
P

Albermarle

One aspect to consider is that the more guaranteed income you have ( DB + SP), the more risk you can take with the investments in your DC pots, which in the long run should benefit you financially.
As said the commutation rate of <17 is not great, even if it is tax free. Normally private sector DB schemes have rates in the region of 21 to 24 .