Very general pension question

[Lipsandlashes]

Not one for Money Matters as it really is very general; if you have/had a public sector pension or a pension where you can take a lump sum, how much did you decide to take? Also what did you do with it? (Sorry that is really nosy but I am intrigued). My mum worked for the Civil Service for years but all I can remember her doing with her lump sum was taking us on a really luxury family holiday.
I was looking at my pension projection today (I'm not due to retire for 25 years!) but the lump sum was the stuff dreams are made of!

I'm not there yet, but DH and I both have public sector pensions for different roles. One of my two pays out at 60. We've long since planned it 😂.

Following years of chatting with colleagues, many people are swayed by the biggest lump sum to pay off a mortgage. Others will be mortgage free by retirement, want a fancy holiday and a new car but the rest in a higher monthly income.

Me, I'm in the middle. The mortgage will be gone by then so we've planned for a massive holiday or five, followed by new motorbikes or cars all round, a house redecorate, some savings plus a decent income.

Some people will just maximise the lump sum depending on the tax numbers.

Thanks @SilverHairedCat We would be mortgage free by then but I'm thinking the lump sum could go towards a house deposit for our two daughters.

Depending on which scheme you're in, you don't have to take a lump sum, you can take a higher annual pension instead, and you could probably mix it up between the two on a sliding scale of increasing annual pension, smaller lump sum.

Paying off mortgages, car replacements, home improvements and big holidays are probably the go to for a lot of people.

Yes, the lump sum for my pension (LGPS) is on a sliding scale and I was surprised at how much lump sum I could take without affecting the annual pension amount too much.

I was medically retired so was give my full pension at 52. Ie as if I had paid till I was 67.
As my conditions are very life limiting ( I am about to go on the transplant list ).
I opted for the biggest lump sum with the smallest pension. It is currently sitting in the bank. I have no mortgage and when I get my transplant I have a list of ways to spend it .. that includes much travelling

@hisnameisfreckles

I was medically retired so was give my full pension at 52. Ie as if I had paid till I was 67. As my conditions are very life limiting ( I am about to go on the transplant list ). I opted for the biggest lump sum with the smallest pension. It is currently sitting in the bank. I have no mortgage and when I get my transplant I have a list of ways to spend it .. that includes much travelling

I hope that you have the most amazing experiences and visit everywhere you want to

Assuming mortgage has been paid off but make sure house is up to a decent standard, make sure we have a good reserve in savings, and the rest will be travelling!

I've just done the maths again 😂

I always calculate the difference between retiring at 60, 62, 65 and 68. Still think I'll go at 60 but the difference is at 68 is £££.... It would mean £11k/yr difference in pension and £73k in max lump sum... But you can't spend it when you're not here, we don't have and can't have kids, so I think we should take some time to ourselves in retirement while we are young enough to use it!

A pension adviser pointed out to us that by the time you're 80 you probably won't be going bungee jumping in New Zealand, so your money will last longer as you get older.

I commuted as much of my monthly payment to maximise my lump sum as I could; I’ll still be working for the next 20 years, so I pay 40% tax on my pension monthly income, whereas the lump sum was tax free.

Once I turn 55, my monthly pension amount returns to the pre-commute value anyway.

The lump sum was paid into my bank account overnight. By 07:30 the next morning, it had all gone out and into the account of my roof thatcher.

@AuntyMabelandPippin

A pension adviser pointed out to us that by the time you're 80 you probably won't be going bungee jumping in New Zealand, so your money will last longer as you get older.

That is a very good point. Come to think of it my elderly parents have very minimal outgoings and very good pensions.

I retired early at 55 on my Civil service pension (only 15 years service) and took the maximum lump sum of £25k. (my family are not known for their longevity).

We bought a car and are paying for the kids rent for uni accomodation. Took a part time job in a different field to pay for holidays and keep me sane.

I’m maxing my lump sum out to give my children money in a couple of years. Will also redecorate and have some travel money. Another point to remember is that you can leave the lump sum in your will to your children but the pension is usually half or less and usually goes to a specific person such as partner.