Unsure if this is good or not

Sobeboy15

Im 56 years old with a very small DB pension which I paid into for only 18 months. My Main pension which Im not touching till I am of retirement age is separate. I earn approx £15k a year in interest and no other income due to early retirement (self funded no pensions taken)

My Small DB pension has given me the following retirement options if I take it early:

Option 1

Tax free cash of £4,999.97 and reduced pension of £749.99 pa

Option 2

Full pension of £960.06 pa

It also says as I am retiring before my normal retirement age the figures quoted have been reduced by a factor of 0.87500 to allow for early payment.

Im unsure if I should take this early it's my 57th Birthday this month and the normal retirement age on this pension is 60.

Any advice or comments would be greatly appreciated.

Dazed_and_C0nfused

https://forums.moneysavingexpert.com/discussion/6654663/unsure-if-this-is-good-or-not

TFLS multiple isn't bad.

But do you actually need either that or the pension now?

Do you have any reason to think you won't be getting this pension for say 35+ years once it's in payment?

Sobeboy15

I don't really need the money however I have a chronic illness that's not life threatening.

I think the TFLS would be good can put it towards a nice holiday.

I have recently lost relatives and friends who only just reached pensionable age and its made me question if I should take mine earlier (if that makes sense).

This DB pension was from one of my first jobs when I was earning only £15k a year and I paid hardly anything into it.

af1963

Are you confident that state pension plus your main pension (plus remaining savings) will be enough for you from the ages when they start paying ?

What difference would you see, later in life, between a regular extra income of £750pa taking it early with the lump sum, and a regular extra income of £1100pa taking it at 60 with no lump sum ?

Albermarle

If you wait until 60, the pension on offer would probably increase by about 12 % ( it varies a bit from scheme to scheme) .

Without knowing details of your main pension, it is difficult to see the full picture.

I have recently lost relatives and friends who only just reached pensionable age and its made me question if I should take mine earlier (if that makes sense)

Despite your unfortunate relatives and friends, the statistical chance of you dying in the next say 10 years is surprisingly low. It is still well within a single figure % for the next 20 years. You have a nearly 50% chance of lasting for nearly 30 years, and a 25% chance of lasting for another 35 years.

OldScientist

Another consideration is how the DB pension is increased with inflation in payment and in deferral. For example, If inflation protection is minimal (e.g., a 2.5% cap or, given it is an old pension, possibly no protection at all) then taking it early may be more valuable since its purchasing power will not keep up with future inflation.

Otherwise one advantage of taking it early is greater income (and possibly TFLS) when younger.

The disadvantage is lower income when older.

I'm not sure there is a simple method for deciding between these two options.

I note that the DB income appears to be small compared to your current income (the £15k interest - which implies a savings pot of upwards of £400k and therefore the TFLS is also small compared to the size of your savings). In other words, I suspect that in the short term at least your decision will not be critical either way.