What way to go?

tony4147

My wife is 63 and currently working as a teacher and looking to retire next year when she’s 64. She has 2 pensions, 1 with TPS and the other with HBOS, and she has a multitude of options as to which way to jump with her pensions –

 

TPS – Pension of £23683 and TFLS of £33,322 OR she has the option to buy an additional lump sum and her pension would then be £17,010 with a lump sum of £113,390

HBOS – Pension of £7610 with no lump sum OR pension of £5756 and lump sum of £38,374

 There is also an AVC with the Pru which will provide a pension of £850/yr with a lump sum of £10500

Our situation is we have a mortgage of £50k on a house worth approx. £900k, I’m not that interested in clearing the mortgage as I currently pay that from my earnings.

We have about £70k in ISA’s.

My own pension is a SIPP and is currently worth £560k and I intend to work another 3 years and contribute £40k / yr, hoping for my SIPP to be £720k+ when I retire in 3 yrs at 65.

Very undecided as to which way to go, my wife is thinking the larger monthly pension with both TPS and HBOS lump sums, where I’m thinking go for the additional TPS lump sum and take a reduced pension. 

We are both currently in good health and should the worse happen and my wife were to die then I will receive a spouse pension from both pensions.

We don’t particularly need to max out the lump sums but you never know what is round the corner and my thoughts are that when she dies the pension dies with her, and that it’s better to have the lump sums in ISA’s etc.

In addition both of us will receive Max SP at 67.

Any thoughts on the best way forward?

Marcon

tony4147 said:

My wife is 63 and currently working as a teacher and looking to retire next year when she’s 64. She has 2 pensions, 1 with TPS and the other with HBOS, and she has a multitude of options as to which way to jump with her pensions –

 

TPS – Pension of £23683 and TFLS of £33,322 OR she has the option to buy an additional lump sum and her pension would then be £17,010 with a lump sum of £113,390

HBOS – Pension of £7610 with no lump sum OR pension of £5756 and lump sum of £38,374

 There is also an AVC with the Pru which will provide a pension of £850/yr with a lump sum of £10500

Our situation is we have a mortgage of £50k on a house worth approx. £900k, I’m not that interested in clearing the mortgage as I currently pay that from my earnings.

We have about £70k in ISA’s.

My own pension is a SIPP and is currently worth £560k and I intend to work another 3 years and contribute £40k / yr, hoping for my SIPP to be £720k+ when I retire in 3 yrs at 65.

Very undecided as to which way to go, my wife is thinking the larger monthly pension with both TPS and HBOS lump sums, where I’m thinking go for the additional TPS lump sum and take a reduced pension. 

We are both currently in good health and should the worse happen and my wife were to die then I will receive a spouse pension from both pensions.

We don’t particularly need to max out the lump sums but you never know what is round the corner and my thoughts are that when she dies the pension dies with her, and that it’s better to have the lump sums in ISA’s etc.

In addition both of us will receive Max SP at 67.

Any thoughts on the best way forward?

There's nothing at all in your post about your attitude to risk, family situation (?children), IHT planning, regular outgoings, aspirations...

Maybe some proper (paid for) financial advice based on a full understanding of your situation would be a really good investment, rather than random strangers guessing what might be 'the best way forward' based on close to zero information? 

flaneurs_lobster

I'm sure that you are simply focusing on the decisions to be made wrt your wife's pension situation but you've mentioned the consequence of your wife's death twice, your own, not at all. 

Dazed_and_C0nfused

tony4147 said:

My wife is 63 and currently working as a teacher and looking to retire next year when she’s 64. She has 2 pensions, 1 with TPS and the other with HBOS, and she has a multitude of options as to which way to jump with her pensions –

 

TPS – Pension of £23683 and TFLS of £33,322 OR she has the option to buy an additional lump sum and her pension would then be £17,010 with a lump sum of £113,390

HBOS – Pension of £7610 with no lump sum OR pension of £5756 and lump sum of £38,374

 There is also an AVC with the Pru which will provide a pension of £850/yr with a lump sum of £10500

Our situation is we have a mortgage of £50k on a house worth approx. £900k, I’m not that interested in clearing the mortgage as I currently pay that from my earnings.

We have about £70k in ISA’s.

My own pension is a SIPP and is currently worth £560k and I intend to work another 3 years and contribute £40k / yr, hoping for my SIPP to be £720k+ when I retire in 3 yrs at 65.

Very undecided as to which way to go, my wife is thinking the larger monthly pension with both TPS and HBOS lump sums, where I’m thinking go for the additional TPS lump sum and take a reduced pension. 

We are both currently in good health and should the worse happen and my wife were to die then I will receive a spouse pension from both pensions.

We don’t particularly need to max out the lump sums but you never know what is round the corner and my thoughts are that when she dies the pension dies with her, and that it’s better to have the lump sums in ISA’s etc.

In addition both of us will receive Max SP at 67.

Any thoughts on the best way forward?

Don't understand your logic there 🤔

TPS is only offering her £12 for each £1 of pension she gives up.

HBOS are offering over £20 for each £1 she gives up.

So if a lump sum is important then taking the HBOS offer seems the better option.  Although the normal pension age of each scheme might be a factor?

You are likely to find little enthusiasm for extra TPS lump sum as she could be getting the extra (inflation protected) pension for 30+ years so taking £12 is an expensive way of getting the lump sum.  Especially when you don't seem to actually need it.

tony4147

flaneurs_lobster said:

I'm sure that you are simply focusing on the decisions to be made wrt your wife's pension situation but you've mentioned the consequence of your wife's death twice, your own, not at all. 

On my death my SIPP, house etc would be passed across to my wife. 

LHW99

when she dies the pension dies with her,

Are you sure about that? If either (both?) are DB I would have expected a spouse pension when she passes

tony4147

LHW99 said:

when she dies the pension dies with her,

Are you sure about that? If either (both?) are DB I would have expected a spouse pension when she passes

I did say that there is a spouse pension from both DB

DRS1

tony4147 said:

LHW99 said:

when she dies the pension dies with her,

Are you sure about that? If either (both?) are DB I would have expected a spouse pension when she passes

I did say that there is a spouse pension from both DB

and I bet the amount of the spouse's pension is not impacted by whether she takes a higher lump sum or not.

Marcon

DRS1 said:

tony4147 said:

LHW99 said:

when she dies the pension dies with her,

Are you sure about that? If either (both?) are DB I would have expected a spouse pension when she passes

I did say that there is a spouse pension from both DB

and I bet the amount of the spouse's pension is not impacted by whether she takes a higher lump sum or not.

In a DB scheme, it's normally only the member's own pension which is 'commuted' to provide the cash lump sum, with survivor benefits calculated as if the member hadn't commuted any of their pension.

Exception is where the whole pension is commuted on grounds of triviality.

LHW99

tony4147 said:

LHW99 said:

when she dies the pension dies with her,

Are you sure about that? If either (both?) are DB I would have expected a spouse pension when she passes

I did say that there is a spouse pension from both DB

Then those pensions don't "die with her"

Cobbler_tone

Worth clarifying the spousal protection. Mine is very straightforward. If I took it today and the pension was £18k a year, the spousal pension is £9k. If I deferred to next year and it was £20k a year, the spousal would be £10k etc.
If I died before accessing my pension it would be based on 50% of the pension at the NRA.
The lump either way would make no difference.