NRA 60 Benefits Options

[scoobydo79]

Hi Guys . Your thoughts and expertise please. Coming up for 60 and have 3 options regarding pension payment options. Now I’m fortunate enough not to have a mortgage now and no dependents.So do I go for the smaller lump sum and bigger monthly payments or the bigger lump and smaller monthly payments? TIA.

[Wullie10]

I'm coming up to 60 and have a smallish mortgage. I'll be taking the largest lump sum possible. I think I give up about £1,000 a year for each £20,000 lump sum. The job is toxic for my health and I've worked with a few lads who are sadly no longer here. I reckon ages 60 to 65 will be the last quality years I may have to travel and enjoying life. Each to their own. I think most people take the largest lump. There's the 65 and state pension yet to come to cover your nappies and new false teeth.

[robking]

Your pension is taxable, so unless it's a really small pension that falls under the tax radar, it makes most sense to take the maximum tax free cash lump sum and accept a lower pension.

If you want income from the lump sum, open an ISA account and take an income from it which will be tax free. Note however the maximum you can put into an ISA in any tax year is £20,000 but if you are married, your spouse can have an ISA too, cash transfers between married couples are tax free.

Alternatively you can put in £20,000 now and then put up to another £20,000 in when the new tax year starts in April. Pay off any debts first because you'll be very unlikely to get a secure return that is higher than interest on money owed.

[Wullie10]

£1000 a year minus tax is about £15 a week. It would take some years to be better off taking the max pension.

[NorthernBoy]

Scooby, what is the ratio of pension given up to lump sum on your options?

Eg how much does say £1000 lump sum cost you in terms of annual pension.

Personally I am going for max lump sum with a view to spending it on holiday etc during my health years

[Jack1960]

I took max lump at 60 , i had more holidays and breaks in 5 years then the previous 40

[hatter68]

I would ask the same question on the Pensions and annuity section on the money saving expert website. There are some knowledgeable people on there.

[Wullie10]

I took max lump at 60 , i had more holidays and breaks in 5 years then the previous 40

[RobertT]

I would ask the same question on the Pensions and annuity section on the money saving expert website. There are some knowledgeable people on there.

In my experience, most people on this forum will say take the max lump sum. But most on MSE will probably say take the max pension.

Ultimately, there's no correct answer, do what's best for you. Or if in doubt consult an IFA.

[NWpostie]

The best thing to do is built up your AVCs to fund your lump sum while keeping as much of your pension intact is the best way forward, if you dont have an AVC you would have to sacrifice part of your pot to fund it and get a reduced pension.

[heapsy]

Hi Guys . Your thoughts and expertise please. Coming up for 60 and have 3 options regarding pension payment options. Now I’m fortunate enough not to have a mortgage now and no dependents.So do I go for the smaller lump sum and bigger monthly payments or the bigger lump and smaller monthly payments? TIA.

You don't say whether you have any other pensions or what number of years you have, so it's hard to say. How much cash in the bank would you need? If any other pensions, what is the status with those, amounts, when are they due etc? Do you have any money coming your way in the future? If any of the above, try to mix n match to get the best result for you. Are you continuing after 60? Taking a pension early just because you can, might not be the best idea. Reduction, plus more paid in tax etc.I plan on leaving my 65 pension where it is until 65. I'll use other means until then, but will almost certainly be leaving at 60.

[grchpo]

Is leaving it there for 5 years the best option, I know you get a reduction but you get it 5 years sooner. Also is it safe to leave it, don't trust RM not to raid especially if they do go broke

[heapsy]

Yes it is safe. the problem I'm coming across is people not knowing facts and spreading rumours. Had a few cases in our office.

[robking]

Is leaving it there for 5 years the best option, I know you get a reduction but you get it 5 years sooner. Also is it safe to leave it, don't trust RM not to raid especially if they do go broke

Since the Maxwell saga governments have put in place laws which mean that pension funds are now strictly ringfenced and employers have no access to the money.

[grchpo]

Isn't the £900 bribe coming out of the pension fund?