Retirement benefits statement? whats best??

I am so sorry for your wife's condition. It really is so difficult for us to advise you on these threads - our help tends to revolve around making you aware of some of the technicalities and trying to explain things win plain english of we can help in that respect.

I will try and set out what I would be taking into consideration if I were in your position.

First and foremost, is your wife claiming the benefits she is entitled to, to help pay for care for herself? My Sister was talking about this yesterday in relation to a relative who is too proud to claim and is therefore missing out on (approximately) £3000 towards her personal care - Do claim. You have paid for this over your working life. It is not means tested (i.e. not based on your income and assets). It is OK for her to "pay" you to care for her.

You are only 59. Your state pension will not be payable until you are 66 (SPA - state pension age). I would be looking at what my outgoings are in order to inform my decision between options 2 and 3. Why only options 2 & 3?

Option 1 reads like a fixed pension offering, and while the lump from your pension is highest, I think (note, think) that your pension would not increase beyond £1,000 a month, or £12k per annum. In six years time you may well not have enough to live on. NB unlike a DB option that will link to an inflator (maybe by a set %age, of maybe CPI or RPI (consumer or retail price index)

If you need the capital sum of £72k (maybe to pay off a mortgage) this might be the option for you, but you might struggle on the lower monthly income. You say you intend to work again but you must ensure you have your personal circumstances covered. Another reason why you should claim the benefit to help while you are unable to work in order to look after your wife

If you personally could manage without the lump sum, another question to consider before ruling out option 2 is one of inheritance. If you have children you want to provide for, taking a lump sum as well as income from your pension may be the route to go. As your wife will not be alive to take advantage of any dependent/partner benefits if your own life is not long and healthy, maybe this is something for you to consider. When you die, your DB pension would die with you, assuming your wife pre-deceases you and you do not remarry.

You also have the £40k to consider. Your pension savings of £40k exceed the current limit* of £30,000 that would allow you to draw down (remove) this in cash (maybe over several years between retiring and SPA?), without you first taking advice (for a fee) from an IFA. - In your current circumstances you have said you do not want to think about this, so if you can manage without that capital, leave it for a year or two and rely on your DB pension plus the benefits your wife claims (!) to top it up. At the point you resolve what you are going to do with this, you could currently take 25% of it as a tax-free lump sum. Again*.

*[That limit might change but the Chancellor is looking for income having sacrificed the self employed NI Contributions change last week - if I were a betting person, I would only look for this sort of sweetener in the Autumn Budget 2019 - when they are dangling temptation ahead of the next election - and there is discussion about him limiting tax-free removals in the future to fill that gap]

There is no NI contribution on your pension when you begin to draw it but you will pay tax for income over £11,000 (£11,500 from April). That said, you will need to consider paying a NI contribution for the years you do not work between giving up work and SPA. If you take another job, you will pay normal Class 1 employee contributions but with your SERPS opt-out, you may need to maximise the years you have left to improve between Basic and single state pensions - (£119 vs £155 or somewhere between, based on current rates).

I hope this helps a bit

There is a fourth option. You could argue that a DB pension is of less value to a bloke who's lost his wife because the widow's pension rights are now worthless. You could therefore ask them to quote a Cash Equivalent Transfer Value and think about whether you should transfer out into a money purchase scheme. That, however, removes the investment risk and longevity risk from the shoulders of your scheme's trustees and puts them on your shoulders.

Linton wrote: »

I dont see any evidence that Option 1 is for a fixed rate pension different to Options 2 and 3. The numbers would suggest that it's the same. However the OP should find out what the index linking arrangements are.

I agree. My "I think" is based on the fact that options 2 & 3 specifically do mention defined benefit, therefore, it is not - as I said before, "I think".