civil service DB increased lump sum

Driftaround

Hi all. New to this site, but not to MSE.
Is there a simple answer to the question of whether or not to take an enhanced lump sum (80% increase) in exchange for a 20% drop in my monthly pension in my DB pension. I wasn't aware I could get an increased lump sum, so I'm in a quandary. I am approaching 60, when I can take my DB pension, I have no mortgage or debt, £50k in people's pension and £70k in savings.
I spoke to an IFA, who was trying to sell me a 'happy plan', so am wary. 
Are opinions that varied? I will miss the extra pension if I live another 12yrs, but I like the idea of inflation proof monthly payments.

GunJack

With no debt and the other amounts you have, why would you want to reduce your monthly inflation proofed income??

Also it's a poor commutation rate at 12:1, so £100 given up only yeilds £1200 in lump sum...not a good idea.

Dazed_and_C0nfused

GunJack said:

With no debt and the other amounts you have, why would you want to reduce your monthly inflation proofed income??

Also it's a poor commutation rate at 12:1, so £100 given up only yeilds £1200 in lump sum...not a good idea.

Because you are giving up that £100 (plus the annual increases it would attract) for the rest of your life.

The £1,200 in a one off.

That £1,200 would cost you a lot of lost pension over the next 30+ years 😳 

QrizB

This is a Civil Service pension so the commutation factor is 12:1. That's not generally considered to be a good deal.

It might be worth taking if you've got high-interest debts to clear (and you've said you don't) or if you're in poor health and don't expect to live past your mid-70s.

Marcon

Driftaround said:

Hi all. New to this site, but not to MSE.
Is there a simple answer to the question of whether or not to take an enhanced lump sum (80% increase) in exchange for a 20% drop in my monthly pension in my DB pension. I wasn't aware I could get an increased lump sum, so I'm in a quandary. I am approaching 60, when I can take my DB pension, I have no mortgage or debt, £50k in people's pension and £70k in savings.
I spoke to an IFA, who was trying to sell me a 'happy plan', so am wary. 
Are opinions that varied? I will miss the extra pension if I live another 12yrs, but I like the idea of inflation proof monthly payments.

What instructions did you give the IFA in terms of your objectives and attitude to risk? I've no idea what a 'happy plan' is, but without knowing what you told them, it's impossible to know if their suggestions would best enable you to meet those objectives (and that's what the role of the adviser is - it isn't simply to maximise cash!).

Driftaround

Thank you for your replies. The happy plan suggestion came from Joslin Rhodes, who were trying to sell me it, after 90 mins of gathering my financial info, at a cost of £2364. They answered none of my questions. I am currently looking for an IFA but thought I would see if either choice was a no brain first.

QrizB

Driftaround said:

Thank you for your replies. The happy plan suggestion came from Joslin Rhodes, who were trying to sell me it, after 90 mins of gathering my financial info, at a cost of £2364. They answered none of my questions. I am currently looking for an IFA but thought I would see if either choice was a no brain first.

According to:

https://www.joslinrhodes.co.uk/

... they're IFAs, but honestly you're unlikely to need an IFA if your main retirement income is going to be a Civil Service pension.

I'm guessing you've got a mix of Classic and Alpha? You've been given you McCloud options? Do you want to share the numbers, and what pension income you expect to need for retirement?

Phossy

Whether you want help from folks here or an IFA, probably best to give a little more detail.

How much is the Standard Pension and lump sum at 60 ?
What is the enhanced pension and lump sum at 60 ?
Will you have a full state pension in due course?
Are you planning to retire at 60 or  take the pension and continue to work?

Then the key question, how much nett income do you forsee yourself needing on a monthly or annual basis?