DB pension

goldfinch25

I have a DB pension that is payable from December at age 62. I have the option of an annual pension of £10615.56 or lump sum of £52170.36 & pension of £7825.56.

I work part-time & will continue with this so I will not be dependent on my pension at this time. My state pension is payable at age 67.

My intention is to take the full pension but is there anything else I should consider?

Also should I make additional payments to my NEST pension or would I be better saving elsewhere?

Cobbler_tone

You won’t see much resistance on here to take the full pension as opposed to a lump sum. Unless you have a good use for it, debt management, mortgage, spending spree etc. The only question is what is the normal retirement age, as if you don’t need the money can you afford to leave it to 65? Depends on what pension it is.
Always good to still pay into a pension if you can afford it. 62 suggests you are either taking extra for having it late, or a reduction for early.

I’ll take a fiver off the first person to mention your commutation rate. 

goldfinch25

My DB pension is payable from age 62, I’m not sure there is any benefit to not taking it then

Albermarle

goldfinch25 said:

My DB pension is payable from age 62, I’m not sure there is any benefit to not taking it then

If I was you I would find out for sure.

Lowtrawler

goldfinch25 said:

My DB pension is payable from age 62, I’m not sure there is any benefit to not taking it then

The point is, 62 is an unusual age for the pension to become payable. Most commonly, it would be 60, 65 or state pension age. You should make sure you are correct about it being 62.

Some pensions will provide increments if you take the pension later than the point when it becomes payable. Others will not. You need to know what happens in your case i.e. if you claim at 63 rather than 62, do you get a higher pension?

goldfinch25

Thank you but I am quite sure it is 62

Marcon

goldfinch25 said:

I have a DB pension that is payable from December at age 62. I have the option of an annual pension of £10615.56 or lump sum of £52170.36 & pension of £7825.56.

I work part-time & will continue with this so I will not be dependent on my pension at this time. My state pension is payable at age 67.

My intention is to take the full pension but is there anything else I should consider?

Also should I make additional payments to my NEST pension or would I be better saving elsewhere?

Whether you would be better saving elsewhere (ie other than a pension scheme) depends on your objectives.

If you are looking at pension saving, NEST has a contribution charge of 1.8% - very few other schemes impost such a cost, so looking at a personal pension with low charges may be preferable, especially if you'd like wider investment choices.

Lowtrawler

goldfinch25 said:

Thank you but I am quite sure it is 62

I'm guessing your DB scheme is either Pearson or Axa? If so, both provide actuarial increments for late retirement. You will need to contact the scheme administrator to receive a pension quotation that reflects current late retirement uplifts.

Aylesbury_Duck

I have a small DB pension with Mercer that is payable from 60.  At the current valuation it would be worth £2,089 p.a. from 60.  I can elect to defer it, and for each year I defer it, it becomes 5-7% higher until 65, when it jumps by 61% to £4,389 p.a.

Makes sense for me to defer it for 5 years, given my currently good life expectancy.

af1963

Also worth checking what happens to the pension amount in future, after you start taking it. 

If it increases with inflation, that's another good argument for taking the higher regular pension.  But if it has lower maximum increases, it would make the lump sum relatively more attractive. Each scheme has its own rules.

Sometimes different parts of the pension increase at different rates, and some tranches may not increase at all.

SarahB16

goldfinch25 said:

Thank you but I am quite sure it is 62

I'm another one suggesting you definitely confirm that the normal retirement age is 62.  That is an extremely unusual age.  For something as important as this I would prefer to be absolutely certain and have it in writing rather than just being 'quite sure'.