DB lump sum question

katejo

I am about to retire and claim my SAUL DB pension and will have to decide how much I want to take as a lump sum once the final quote arrives. I don't need a large lump sum as I have other savings/ISA. My instinct is to take about 50% of the lump sum offered or slightly less to use to spoil myself with a few more expensive holidays while still healthy. I want to take the rest as a slightly increased index linked monthly income. I know that the commutation value for lump sums isn't usually that good. Is there anything else which I should consider when deciding how much to take as a lump sum? I can't think of anything.

LHW99

Do you have any health conditions that might reduce your life expectancy? That could mean more lump sum would be better than aditional income that would only be paid for a short time.

On the other hand if all your family live to 90+, the extra income could be a better bet.

Main thing is to make sure you have enough income for the future, plus a bit to enjoy some treats for yourself once in a while. Having a DB plus state pension (do you need to use any lump sum to top up?) is a nice retirement income basis.

katejo

No serious health issues at the moment though I do tend to worry a bit over health things. Also no kids to support. A financial advisor tried to suggest a larger lump sum and buy an annuity with it but I don't see any advantage over the DB pension increments. He isn't independent. I can't add anymore to my state pension

DRS1

Doesn't the USS have a DC part as well - Investment Builder? Can you not use that to give you whatever lump sum you need and get a higher pension from the DB part?

katejo

https://forums.moneysavingexpert.com/discussion/comment/81896464#Comment_81896464

My pension is SAUL not USS. No DC part.

DRS1

https://forums.moneysavingexpert.com/discussion/comment/81896469#Comment_81896469

Oh Sorry. That may not be the first time I made that mistake.

katejo

https://forums.moneysavingexpert.com/discussion/comment/81896473#Comment_81896473

Don't worry! I find that many people in this forum assume that DB pensions are USS (or Civil service). SAUL rarely gets discussed.

QrizB

To be fair to DRS1, you did say in your opening post:

I am about to retire and claim my USS DB pension

I can understand why they thought you were in USS!

LHW99

https://forums.moneysavingexpert.com/discussion/comment/81896463#Comment_81896463

If you reuce the lump sum and increase the annual pension, then you can always pay into a Sipp or personal pension with any spare (£2880pa unil age 75), which gets tax relief added on, and use that for an annuity when you are older and would get a better rate.

If the adviser isn't independent (IFA) then IMO he's a salesman and not really working for you as much as for his company.

katejo

https://forums.moneysavingexpert.com/discussion/comment/81896681#Comment_81896681

Haha 😂! I wonder whether that popped up automatically? I only put DB in the title. Or I meant to type Uni! I have corrected it now.

katejo

So I can take money from my monthly SAUL pension and set up a SIPP? I haven't heard of this option. The advisor isn't independent but he has been very helpful and not pushy. I wouldn't have used him if he had been.