Pension

bluejake63

Is it always a good idea to take the full 25% tax free lump sum from your pension? 

On-the-coast

No, In many cases not. 

2 characters “no” was too short to pass the forum message test!

Murphybear

I don’t think this is that straightforward.  It depends on if you need rather than want the money.  My partner cashed in some of his pension to kit us out with Miele appliances, nearly everything needed replacing and we wanted to get a dishwasher.  This was quite a long time ago and the Miele stuff should see us out . 

Mark_d

I'm still some 20 years away from retirement.  I think I'll likely take the lump sum as we'll want it to buy our forever home.  But if we didn't need that huge lump sum then I'd opt for the bigger annuity payment.

tacpot12

It's almost never a good idea to take the lump sum. Only if your home is about to be repossessed or you are terminally ill might it be a good option. 

Albermarle

Whether it is a good idea or not largely depends on your personal circumstances

I would suggest reposting in the Pensions forum and at the same time supply more personal details.

[Deleted User]

It is a purely personal decision. At times it is not always the best personal outcome to take the optimal financial one! An approach some on here find difficult to fathom. Do what is best for you and your circumstances.
I was in a slightly different position as I had a public sector DB pension. I had my 25% tax free sum but also maximised it, to the horror of some on the pensions board lol!
However, it was the correct decision for me and I do not regret it one bit.
I was able to pay off my mortgage, settle any debts and still have a useful back up in the bank.
The residual pension was sufficient for my needs.
My decision set me up for my retirement.

p00hsticks

Are you taking about a DB pension or DC ?
I think the majority of responses are assuming it's DB (in which case the scheme rules may not even offer a 25% PCLS. 

Pollycat

There's a specific pensions board here: 
https://forums.moneysavingexpert.com/categories/pensions-annuities-retirement-planning

Savvy_Sue

I had a tiddly Local Government Pension which fell due when I was 60. I found out what the 25% would be, and DH worked out how long I'd have to live in order to make the full pension worth more than taking the 25%. The answer was more than 10 years, so we decided with inflation being what it is, we'd have the 25%. We didn't take advice over that, because it really wasn't enough to worry about. 

We also took the 25% when I used my tiddly pensions from my last employer to buy an annuity (for which we had advice - rates were very good at the time!) It paid for new windows on the house, which it turned out also rectified a couple of structural problems!

So for me, it was the right decision, but it's not something I'd have done the second time without advice AND a need!

BTW, I had a friend working for AgeUK - their view was that under the most recent arrangements, it was rarely sensible to defer claiming State Pension. 

Clowance

I am not an expert, but working on the basis that it would take you x number of years to recoup the whole of the lump sum, ( I know tax payable on 75%) often you would need to live for a large number of years to get it back in increased pension. As I have diabetes and also most relatives did not live to great age, it was worth it for me, also not huge sums anyway.