Pension advice
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Louise321
Posts: 8 Forumite
Hi everyone, first time posting for me. I’ve recently been awarded ill health retirement with enhancement. I’m a member of the civil service alpha scheme. Unsure what to do next. I’m quite young, 42 we paid our mortgage off a few years ago and my husband has money already set aside for a rainy day. I’ve been offered a pension of just under 12k or a lump sum of £50k and reduced pension of£7.5k . Just don’t know what to do.
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It probably makes a difference if your ill health condition is life limiting. Generally speaking it seems better to get the higher pension for the rest of your life if you have normal life expectancy. If not then the lump sum might be a more attractive option.I’m a Senior Forum Ambassador and I support the Forum Team on the Pensions, Annuities & Retirement Planning, Loans
& Credit Cards boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com.
All views are my own and not the official line of MoneySavingExpert.0 -
Hi everyone, first time posting for me. I’ve recently been awarded ill health retirement with enhancement. I’m a member of the civil service alpha scheme. Unsure what to do next. I’m quite young, 42 we paid our mortgage off a few years ago and my husband has money already set aside for a rainy day. I’ve been offered a pension of just under 12k or a lump sum of £50k and reduced pension of£7.5k . Just don’t know what to do.
£12,000 minus £7,500 is £4,500 so in 11 years, you'll be 53 and on a reduced pension. If it's indexed linked the break even point will be even sooner. As you're so young, I would say the commutation is not worth it. Lump sums look tempting but indexed linked income for the rest of your life should be considered carefully.
Turn it around and ask where you might get an indexed linked (assuming it is) return of £4,500 a year for a £50,000 investment. That's a 9% return when the banks are barely paying 1.5% for cash at the moment.Signature on holiday for two weeks0 -
Hi everyone, first time posting for me. I’ve recently been awarded ill health retirement with enhancement. I’m a member of the civil service alpha scheme. Unsure what to do next. I’m quite young, 42 we paid our mortgage off a few years ago and my husband has money already set aside for a rainy day. I’ve been offered a pension of just under 12k or a lump sum of £50k and reduced pension of£7.5k . Just don’t know what to do.
You'll have to do the maths against your life expectancy and how much you need the lump sum, it doesn't sound as if you do. At £12k a year you wont be paying tax (assuming this is your only income) , so its as simple as 12-7.5 = 4.5, 50/4.5 = 11, do you expect to live longer than 11 years?
Or more immediately, what would your life style be like now with your income of either 12k or 7.5k? Do you need the full 12k?0 -
That’s part of the problem, at the moment my condition is stable but that could change at any moment. I’m currently undergoing chemotherapy, already had 4 lots of surgery, radiotherapy and have to date had 12 months chemotherapy.0
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Maybe you could ask your consultant what he thinks re normal life expectancy?
You could then calculate an estimate for both options0 -
Originally diagnosed jan 04 with a grade 2 astrocytoma (brain tumour), then needed further surgery may 06 and radiotherapy, then further surgery July 16, most recently surgery August 18 And currently undergoing chemotherapy. My consultant says that because of the type of brain tumour that I have they can’t really give a prognosis.0
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Are there any spouse benefits with your pension you need to bring into consideration?0
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My spouse will get 37.5% of the 12k regardless of what lump sum I take x0
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Is there anything in particular that you would do if you took the £50k lump sum?
And if you did take the lower pension would you need to dip into the lump sum for day to day expenses?
If it were me, the security of the higher pension would likely be the choice I'd make, but If there were specific reasons for taking the £50k lump sum then that might be the best choice for you, and it is how you feel that is the one and only important question here.0 -
Originally diagnosed jan 04 with a grade 2 astrocytoma (brain tumour), then needed further surgery may 06 and radiotherapy, then further surgery July 16, most recently surgery August 18 And currently undergoing chemotherapy. My consultant says that because of the type of brain tumour that I have they can’t really give a prognosis.
Pension aside- wishing you all the best! Jim.0
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