What to do with my Pension?

[KevjustKev]

Next year I will be able to retire, kind of. Or at least be able to claim my company pension.

A little back ground. I have been 'off on the sick' for the last 15 years. I have MY good days, not so good days and bloody nasty days. For those who my wish to ask, I might as well tell you now.

Five types of epilepsy, vertigo, osteoporosis and have crushed my back twice. These means I can't work, more so no one will employ me.I know I wouldn't.

I have tried to find out if by claiming my pension, would it negate my benefits? I can't really out and out ask because the powers that be because... well you know.

However if things do work out, take part of the lump sum and get a larger monthly payment, seems ok with me. Or take that lump sum and put it in some kind of investment fund?

Thanks

And type about this for a bit.🙂

[Seasider]

I know nothing about benefits and what I used to know about pensions is 20 years out of date so what I have to say may not be very useful.

It seems to me this is more a question about what benefits you are on.  Are they state benefits or the company's permanent health care plan?  If they are state benefits then are they means tested or do you qualify for them simply based on your medical status?  When you claimed did you have to give details of your assets or income?  If so then I guess drawing a pension or taking a lump sum will have an impact.  If you don't want to ask but know what the benefit is now called (assuming it may have changed with Universal Benefit) then perhaps the Gov.uk website may set out the conditions for claiming it/continuing to benefit and you could look it up without Big Brother being alerted?

If it is the company's permanent health plan then you may have a booklet explaining how that works.  I imagine it would have been tied in to the company's pension plan so that when the pension starts the permanent health care payments stop.  Or maybe they stop when you get to a certain age?

As to taking the pension/lump sum I do not know too many people who only took part of the lump sum in return for a higher pension.  Probably this is because the lump sum is tax free and the pension is taxed  I assume none of your conditions reduce your life expectancy?  If they do that would be another reason not to increase the pension - unless it would help with any widow's pension which may be payable (although that is unlikely it may be worth asking the pension administrators when you ask them about taking a lower lump sum/higher pension for yourself)

Of course most people blow the lump sum on holidays or paying off the mortgage but if you are not going to do that then think about what income it will generate in the investment fund and how that compares to the pension being given up

Some company pension plans have an ill health early retirement pension but I assume you would already be on that if it applied in your case?

So are you approaching normal retirement age or just the age from which you can take an early pension?  If it is the latter then what is the impact of taking benefits early?  They are usually reduced because they are expected to be paid for longer.

Is the pension scheme a defined benefit/final salary scheme?  Or is it a defined contribution/money purchase scheme?  I should probably have asked that sooner.

Finally I do not know if your medical conditions qualify you for what is called an enhanced annuity (a higher annual payment based on the expectation that you won't live as long as you might otherwise - other factors may also be relevant such as smoking and drinking) but it may be worth enquiring - it is more relevant for someone with a personal pension than a company pension and if all it does is reduce benefits you would otherwise receive anyway it may just be a distraction you don't need.

I'll shut up before I have any other "good ideas".

[caloundracats]

I've read in the press of people who have claimed their pensions early due to redunancy then are ineligible for benefits, so please, be careful in your choice.

Suggest you emial citizens advice bureaux or similar as well as going to the goverement website to see what information you can gleen.

 

[freefall]

In your situation id say paying the money to get professional advice on the pros and cons of all the various options would be a good idea. It could save you a lot of money in the long run. Get an appointment with a financial advisor and go through all the options with them. They may try to sell some product to you but its your decision so if it doesn't feel right don't go for it. At least you'll be in a better position to make a really important decision. 

I have no pension as I feel my money would be spent honouring promises made decades ago that were too generous. The costs and benefits for people paying in now compared to the people who are of pensionable age are ridiculous. The governments insistence on everybody having a private pension through auto-enrolment makes me uneasy. Even if you opt-out (which you have 30 days to do) you are re-enroled after 2 years and the process repeats. I'm a cynic but I feel in future the state pension will be means tested so people who have a private scheme will only receive a partial or no state benefit. Rewarding the irresponsible and penalising the prudent. 

[freefall]

1 hour ago, WotNxt said:

Doesn't that happen now at certain (low) pension levels?

Might be wrong but i thought that you get the basic pension regardless of your current income or wealth. Only stipulations are that you have paid national insurance for the required number of years and you have reached the correct age.

I remember reading about it and thinking it was a bid ridiculous that incredibly wealthy people are entitled to state benefits. That and we have a regressive tax most people don't understand called national insurance (the more you earn the less you pay) but that's a different argument.

I'm about 40 years away from receiving mine so there will be people on here a lot more clued up than I am.