Pension Choice

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Fiftyyearsandcounting

Well-Known Member
Joined
25 Oct 2009
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A pension company has made an offer to convert one of my annual pension into a one-off lump sum.
This is only a small pension of £900 paid annually (fixed for life) and the offer is for 10x (tax at 20%).
I am 73 and reasonably fit for my age except for Type 2 Diabetes which is under control.
This pension is not regarded as part of my budget as such and is used just to treat myself.
I am single, no dependents, own my home and do not owe a single penny.
There is no negotiation, a one-time take it or leave it deal.
Take it or leave it?
 
Fifty. I had a lesser sum with a provider for contributions related to SERPS. Like you it was not part of any budget. I cashed it in, paid my bit of tax on it, gave a bit to my niece and nephew and blew the modest balance.

i now never have to report its existence on tax returns or have the mither of dealing with correspondence from and to the provider.

Presuming you currently pay tax on the benefit at c20% I assume you get a payment of something like £60 per month. It’s a round of drinks for four per week.

the way I looked at it and the way you could, is that if you cash in now you will trouser some 11 years of benefit (notwithstanding increases to the payment sum or depreciation in value of £) . I reasoned that I probably wouldn’t live long enough to earn more in monthly payments than the current value of the lump sum. The clever Actuary who dreamt up the payment offer formula would have had this in his mind.

live reached the stage in my life where I would prefer to cash and spend. I did go back to the provider and try to get the sum increased. I was unsuccessful but having done a lot of pension work over the years it’s amazing how much the provider has to set aside to cover the lifetime liability of these small sums. It’s in their interest to clean their books.

Hope this helps
 
Fiftyyearsandcounting said:
A pension company has made an offer to convert one of my annual pension into a one-off lump sum.
This is only a small pension of £900 paid annually (fixed for life) and the offer is for 10x (tax at 20%).
I am 73 and reasonably fit for my age except for Type 2 Diabetes which is under control.
This pension is not regarded as part of my budget as such and is used just to treat myself.
I am single, no dependents, own my home and do not owe a single penny.
There is no negotiation, a one-time take it or leave it deal.
Take it or leave it?
Click to expand...
Bloody tax
 
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