NHS pension lump sum decision

ali_bear

I like the idea of basing one's life expectancy on those of the grandparents plus some margin for improved healthcare outcomes. But there has been a very significant improvement in the treatment of both heart disease and cancer in the recent decades, with probably more improvements to come. So this method is of little use - better to go with the ONS predictor, the 25% level: 

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

MallyGirl

There is also the fact that Grandparents lived through the war, rationing etc.
My FIL was convinced that he wouldn't make 70 as that is when his Dad and Uncle passed. They both worked at ICI at a time of very different health and safety. He is now 84 and still zooming all over the Pennines on his vintage motorbikes

Moonwolf

It is worth thinking about what you are doing with the extra lump sum given you have no plans for it. 

Lots of people find it difficult to bring themselves to spend money after saving all their life and if you die at 75 with three quarters of your lump sum sitting in a savings account are you really better off than taking a smaller lump sum?

Also, lets say you want to give money away to family and you are at risk of IHT.  If you keep the higher income but you don't need it, you can make regular gifts from that income outside inheritance tax, gifts from your lump sum might attract IHT if you don't live for more than 7 years. I'm surprised at how many people won't live a long time for lump sums but will live a long time for inheritance tax purposes.

Cobbler_tone

ali_bear said:

 better to go with the ONS predictor, the 25% level: 

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

I've always thought this one was pretty pointless. Based on two things, your age today and gender.
Nothing about lifestyle, medical history etc. I know plenty of 50 year old who have pretty much zero chance of seeing 84!
They should make it more 'fun'. Say you were 50, it should say '51...chance of dying in a car crash 1,000,000-1' etc

Appreciate it is all just statistics and maths. Interestingly my 88 year old dad only has 0.1% more chance of making it to three figures than me. That's a tough milestone of get to. Yet someone born today has a 14% shot. 

ali_bear

I accept it is of limited value. They should add tickboxes for all the dangerous pastimes. 

Moonwolf

The people who quote for life insurance probably have the best data.  If only there was a way to convert how much cover you get from £10 a month when you have put in all your risk factors to an actuarial date of death.

hugheskevi

Cobbler_tone said:

ali_bear said:

 better to go with the ONS predictor, the 25% level: 

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

I've always thought this one was pretty pointless. Based on two things, your age today and gender.
Nothing about lifestyle, medical history etc. I know plenty of 50 year old who have pretty much zero chance of seeing 84!
They should make it more 'fun'. Say you were 50, it should say '51...chance of dying in a car crash 1,000,000-1' etc

Appreciate it is all just statistics and maths. Interestingly my 88 year old dad only has 0.1% more chance of making it to three figures than me. That's a tough milestone of get to. Yet someone born today has a 14% shot. 

They can be quite dangerous, as they are for population as a whole and that is not representative of individuals who have been in work and built up good pensions. That can result in people underestimating their life expectancy and planning accordingly.

The Pension Regulator publishes pension scheme longevity assumptions which are quite informative. These seem to be about 3 years higher than population life expectancy, which is quite a lot extra in the context of a typical retirement being about 20-25 years.