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lump sum or higher pension
Comments
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DairyQueen wrote: »Does anyone know whether the unreduced widow's/dependant's pension is a common benefit of private sector schemes?
It's a feature of my own principal DB pension. I urged the OP to look into it because I believe it's not universal.Free the dunston one next time too.0 -
It's a good job this forum is anonymous or you might be in trouble if Mr DQ meets with an 'accident' shortly after taking maximum commutation!DairyQueen wrote: »Now, that's interesting. Thanks for the tip folks.
I need to check the small print of Mr DQ's scheme. It has a tasty 2/3rds widow's pension but he believes that this will reduce proportionately if he commutes.
Does anyone know whether the unreduced widow's/dependant's pension is a common benefit of private sector schemes?0 -
Very simple. What would you do with the extra income? What would you do with the extra cash? Which has more value to you?How should I decide if i should take lump sum and lower pension or higher pension? Commutation is £15 for each £1 sacrificed. I won't be paying higher rate of tax
What almost certainly doesn't make sense is taking the cash and trying to invest it to generate the same or better income.0 -
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I agree that would be my advice in most cases but it depends on the OP's and other half's circumstances. If the commutation factor was a bit higher than 15 it would possibly be worthwhile taking the lump sum and investing it. I understand most people with DB pensions take the tax free lump sum even in they maybe have no immediate plans for it, and probably without even considering the commutation factor.What almost certainly doesn't make sense is taking the cash and trying to invest it to generate the same or better income.0 -
I agree with you Audaxer re the better the commutation rate the more realistic it is to take a maximum tax free lump sum. As I said in my earlier post a 12 to 1 rate means it is not worth taking anything other than the minimum lump sum. In my case, over 19 to 1 for the LGPS was very enticing to take max tax free lump sum0
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I can only comment on myself and many BT friends who have now retired. Most took the maximum lump sum as their view was that they had the money and BT did not, which might be a smart move if they were to die in the yearly years.
I took the standard pension as the higher amount would increase more through compound annual rises. My FA confirmed that if he invested the extra cash he could not make up the difference in lost income from the lower pension so it all goes down to whether you want jam today to spend or jam tomorrow with with more monthly income that puts more pennies into your pocket each year as it started from a higher figure.
I was always told that BT liked people to take the maximum lump sum as it reduced their future liabilities.0 -
I took max lump sum from my principal DB pension.
(i) There were two "pushes", namely that I thought the management of the scheme was incompetent, and my health had been bad for a spell in middle age.
(ii) There were debts that we'd always planned to clear using the TFLS.
(iii) I took the insouciant attitude that of course I could invest the balance of the TFLS better than the scheme could. And so it proved.Free the dunston one next time too.0
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