Any Financial Bods Out There.

[Jeza]

Mic has a small pension due to be paid to him starting on his birthday this month.

He must make a decision on how to take it, as most know Mic is not a well man. So the decision is mine.

He has been offered an upfront payment of £2.200 tax free and a monthly pension of £68 on which, due to other income he will have to pay tax. This payment is for life but guaranteed for 5 years should anything untoward happen.

Or
a one off payment of £ 7,700 tax paid. Financially which is the best offer. I have done the maths so I know how the figures add up. I really can't make my mind up as to what to do for the best considering Mics poor health.

[factor-fiction]

These things are usually finely balanced so that for the pension provider the two work out the same on average over a large population.
But in your case I'd take it all as cash now based on what you've said. However I'm assuming the pension covers Mic only and that there is no widower's pension benefit,

[factor-fiction]

Anotrher factor though is whether he gets any means tested benefits which are reduced if he takes this extra income or if the lump sum would mean his savings are too high for him to still get some benefits

[bookbinder]

Go to an independent financial adviser. He will explain your best options, and he might be able to suggest putting some of the money into a financial product that is not available to the ordinary person. I did that when I retired, because I couldn't decide between all the (confusing) options, and I was quite pleased with the adviser's suggestions.

[factor-fiction]

I would agree for larger sums, bookbinder, but personally would not consider paying for advice in this case as the amounts are relatively small. But everyone is different and for peace of mind it may be worth asking for details of the IFAs fees

[black_cat51]

get the larger amount and spend it

[Baldric]

deal 1
you get £2200. + 60 (guaranteed) payments of £68. which is ££4080.
Total, £6280. over 5 years less tax.

Deal 2
One off payment £7,700.

[Jeza]

Factor, Mic gets no means tested benefit at all. He has been awarded DLA but as I understand it this is not means tested. He gets 2 carers 3 times a day of which we pay full costs because of income and savings.
There is no pension for me from the company mentioned.
If I choose the second option I feel as if I'm saying 'gimme the money' when in fact we don't need the money. Although saying that his care costs are really eating at our savings.

bookbinder I'll give it some thought.

[woofgang]

Jeza, if there is no residual benefit to you then take the money. Mic is entitled to it and you may not feel that you need it, but from what you have said about care costs, I bet it would help.

[New Judge]

The break even point for Mic (that is, the time when taking the lower lump sum and the monthly pension exceeds taking the higher lump sum) is eight years and six months. This assumes that the monthly pension is not increased beyond £68 per month and also ignores any interest that may be earned on the £7,700 (at the moment you might be lucky to get 1.5%, so about £115 per annum) . So, in pure financial terms if Mic lives more than eight and a half years he is better off taking the lower sum and the pension. Taking the lower sum and the pension he is guaranteed to receive £5,465.

I might be inclined to agree with black cat and take the larger lump sum. Unless £68 per month is critical to his finances he might as well enjoy the £7,700.

[Jeza]

Thanks to everyone for their input. I have been thinking about this for over a week and thanks to your input I have made the decision to take the one off payment.
£68 per month less tax would pay for less than 2 days carers fees

New Judge, you did the long term financial aspect better than I did and for that you made the decision a lot easier.

[jamesnan]

I think the one off payment is usually the best option, irrespective. You take charge of it and know it is yours, whereas the smaller lump sum and payments are an unknown factor.