65. Am I going about this correctly?

Dazed_and_C0nfused

https://forums.moneysavingexpert.com/discussion/comment/81900969#Comment_81900969

You simply divide the lump sum by the deduction in annual pension.

The slightly trickier aspect is making an educated guess as to what the pension reduction will be in each subsequent year.

Having a fixed annual increase would solve that conundrum but not many schemes operate like that. Most are variable, either with or without a cap.

DRS1

Yes I did a very simple sum based on the different starting pensions and the amount of the lump sum. But obviously the value of the pension being given up is quite different if the pension increases in line with inflation compared to a pension which doesn't increase at all. Most DB pensions fall somewhere between those two extremes.

katejo

https://forums.moneysavingexpert.com/discussion/comment/81901098#Comment_81901098

Ok I have applied that calculation to mine and got 18.24:1. I did the calculation twice (allowing for either the max lump sum or the mid lump sum). I have no plans to take the max lump sum. I think I will possibly take 50% of the mid range lump sum.

DRS1

https://forums.moneysavingexpert.com/discussion/comment/81901133#Comment_81901133

Well there are worse rates (eg the often mentioned 12:1 for LGPS).

One other thing people factor in is what tax rate you would pay on the pension (the lower the rate the more valuable the pension to you). I have to admit that before reading posts on here I could not imagine why someone would prefer a taxable income to a tax free lump sum but now I see it is not always as clear cut as that.

Dazed_and_C0nfused

https://forums.moneysavingexpert.com/discussion/comment/81901146#Comment_81901146

Quite.

The lump sum is a one off.

The pension, plus annual inflation increases, could be being paid for 35+ years.

And people clearly have different takes on what is most important to them.