CS lump sum Classic scheme

[guessmyusername]

Just wondering those who have retired from CS, do you take the maximum lump sum and reduce your annual pension? I know the maths of it and it is essentially a gamble, how long are you likely to draw your pension for. I wish I had a crystal ball. What have others done?

very jealous. Only got about 10 years in classic before I was kicked out of it!

Friend said to her the downside of the lump sum was that she's too scared to spend it because that's all she has to last however many years with the monthly element being small.

I took the standard lump sum of 3xPension (Technically speaking I TUPED out of the CS but kept the Classic pension T&Cs more or less.) I had 25 years in but had other pensions so had no reason to need a larger lump sum. What would you intend to do with it? If it’s to bridge the years between retiring and state pension age to top your pension it may be worth it.

No a CS, I’m a retired teacher so had a similar decision to make. I calculated how much I would need to live comfortably on when I retired, what work I wanted to do on our house that wouldn’t need redoing in my lifetime and how much of a savings buffer I needed to have. I swapped 3K of my annual pension for an additional tax free £39k lump sum. That reduction in real terms isn’t actually 3K as it would have been taxed at 20%, so in real terms it’s a reduction of £2400 per year.
I’ve been ‘retired’ for 3 years now. Most of my additional lump sum has been in high interest ISAs and up to now has generated a fair few ££££ interest. I also work 2 days a week, which tops up my pension, but actually am saving £500 a month from my wages, which is a lot more than the extra £200 a month I would have received had I taken a full pension, which proves I can manage well on the reduced pension.

I was medically retired at 52 so basically I was treated as if I had worked to 67. I took the maximum lump sum with a smaller pension as my conditions mean I am life limited and I wanted to make sure I got as much out of it as I possibly could lol

Thank you for sharing. I am 62 and contemplating early retirement. I am in reasonable health and both parents lived until their mid 80s, I would expect similar or longer. We have a savings pot and are now mortgage free in our forever home. DH is about to retire as well so just looking to enjoy ourselves. No major purchases intended, except for a bit on our garden and a holiday or two. I had my thoughts on this but wondered if I was missing anything important. Your comments have been very helpful, thank you.

I took the lump sum and so reduced my monthly pension. That was the right thing for me x

@guessmyusername Have you thought of inverse commutation, where you take a lower or no lump sum in exchange for a bigger pension. When we had the presentations where we had to decide between Classic and Alpha that was mentioned.

I went early at 55, mine was 20 years of classic only. Health took a turn for the worse... not bad enough for medical retirement, but bad enough to make me take stock.

I took the lump sum since we've got kids going to uni and it is helping out with accommodation costs. (Pension going up by 10.1% this year has really helped too.)

@LadyLapsang Thank you for that. I wasn't aware that was even an option. Looks like I will need to do some investigating. I had a meeting with our pensions expert a couple of weeks ago and it wasn't mentioned and I didn't ask. I am only taking Classic just now and leaving Alpha until later as there isn't much there.