Pension question!

Discussion in 'Diamond Lil's' started by MG Maniac, Jun 19, 2013.

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  1. So Mrs MG being over 60 now has a Local Government Pension ... so said Pension department drops her a line to ask

    a) Does she want £xxx a month and a £xxxx lump sum or

    b) does she want to increase her lump sum by £12 for every £1 reduction in her monthly pension

    Now the lump sum is tax free so it strikes me that if she says with (a) although she gets about £20 more a month she's going to pay more tax on it for longer whereas if she goes for (b) she gets more in her lump sum (tax free) and gets £20 less a month pension so her tax bill will be lower! Seems a no brainer to me or am I missing something???????
     
  2. Lump sum every time. Heaven forbid she gets knocked down by a bus she has had the benefit of her pension up front and HMG cannot get it back, whereas the monthly payments cease forthwith. Or am I missing something?
     

  3. Nah ... makes sense to me ... I think I was trying to see a catch where one didn't exist! I'm all for keeping dosh and not letting the theiving robbin [email protected] at HMRC got their hands on it!
     
  4. The smaller the pension being received, the smaller the dependents pension on the pension recipients death...
     
    • Like Like x 1
  5. Hadn't thought of that DB, I see where they're coming from now.
     
  6. ............and, subsequently......smaller amount of tax paid on it.
     
  7. I side with the "take the biggest lump sum and the lowest pension" crowd. Especially where the government is involved. They change the rules on a whim so if the money is under your control rather than theirs you know where you are.
     
  8. Without a doubt............you can always convert the lump sum (or part of it) into an income bearing account.....as and when !
     
  9. It's very much a personal thing that has to thought through.

    I opted for more monthly wonga, for me, my family has historically a long longevity. So a lump sum, even invested at 1.5% (a good rate right now). wouldn't be as good as the additional monthly income. How long you live has and always will be a gamble.

    Like I say, personal preferences, think long and hard MG, you only get to make the decision once.
     
  10. It's almost "Me Time"

    I am going to take the lump and smaller monthly.
    Did the same sort of thing when I left the RN -
    reached 55 okay and up the monthly went . Seeing
    as I'll more than likely croak some time after binning
    my current employment, then me and her are leaving
    Blighty to settle somewhere slightly warmer, so an
    initial fair wedge will be necessary and then we'll
    get on by with 2 pensions...maybe 3 and her new
    PIP which is all perfectly legitimate. The time is
    fast approaching when I really don't want to work
    full time.......been doing that for almost 42 years!
     
    Last edited: Jun 20, 2013
  11. AAF

    AAF Badgeman

    So that is our comedy double act up the swanny then ?.
     
  12. One-way ticket to somewhere.

    Absolutely not! I intend to batter a keyboard somewhere in:
    (a). Cyprus
    (b). Corfu
    (c). Albania
    (d). Bridlington

    ...or wherever the hell we rock up when I get to the ripe old age of 60.

    Cyprus is looking a sort of favourite, as I've got dibs on a place just outside Protaras.

    Bollocks to the economic crashes/downturns/Interest Rates and all that. I'll get a job
    in a bar in Aya Napa (spelling?) as a fu**ing horrendous Kareoke singer and work
    on me tan until my clock stops.

    Amen to that.

    Billy.

    p.s. AAF - How's things with you mate?
     
    Last edited: Jun 20, 2013
  13. MG

    it all depends upon your personal circumstances at the time of making a decision whilst also trying to anticipate future events

    do you need the income? if you do then take the income (guessing that Mrs MG is a Basic Rate Taxpayer)

    there is a reason why option b is being offered to you and that is to save the local authority money in the long term in not having to pay out so much dosh to your Mrs and you (being eligible to a dependant's pension) on a regular basis

    any lump sum taken then being converted to produce an income (via and annuity or savings account) will be taxed (the income/interest that is) as an income producing asset anyway so no win there

    there is no right or wrong here as it all depends upon your personal circumstances

    hope that makes some sense?
     
    • Like Like x 1
  14. Bridlington has less hills than Scarborough ,it's why so many retire here!
     
  15. Yes prefectly thanks Rigsby!

    Its also North of Watford so less of retiree's to clog up the roads over here!
     
  16. Cheap beer as well!
     
  17. AAF

    AAF Badgeman

    We were in Brid yesterday Barney for annual WMC trip......stonkin day out.
     
  18. AAF

    AAF Badgeman

    See #17 ....
     

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