Pension pot, what can i take early, confused!!

[Alicetinker99]

Hi All :)
I used to work for the NHS and had a pension with them. I no longer work for them but will obviously get it when i retire.

I received the following in the post this week and to be honest its slightly confusing and wondered if anyone could clarify what it means!

Am i right in thinking that if i dont take the lump sum then i will receive £3082.96 per year? But if i do take the £13212.69 lump sum then my yearly amount will reduce to £ £1981.90?

Thanks

Yes. I'm just about to take my tiny NHS pension. I opted not to take the lump sum and to get a larger pension.

Great thank you! I think i am going to take the lump sum as i have a few big jobs i want to get done at home. I just need to work out the tax implications! Xx

The lump sum you take is tax free. The pension is taxable but if your total income is less than £12,570 you won’t pay any tax on it.

I also notice this thread is called "what can I take early?" but the figures are at your normal pension age. If you retire before that the pension (and lump sum if you opt for it) will likely be reduced to reflect early payment.

Also remember any State pension you get (and pensions from other sources) is all potential subject to income tax if the total is above the £12k ish threshold.

When can you take the NHS pension - now, or not until you are older?

The “commutation factor” for NHS pensions looks to be really poor value (you give up £1 of pension for each £12 of cash). A more reasonable rate would be £20+ cash for each pound given up.

Yes, it is tax free but financially you’re probably better off taking the pension.

If you live 13 years or more then it looks like you lose out by taking the lump sum. What age do you want to live until?

Thanks for the replies! I am looking at retiring when i reach state pension age

I see what you mean about taking the lump sum and being worse off in years to come. I mean i hopefully wont die in the next 10 years xx