Would it be better to take an annual index linked pension of £10,940 or cash £52023 and index linked £7803?
Answers:
You need to find out how much an index linked annuity with a
contribution of £52023 will get in your circumstances if it is less than 3137 then consider the 10,940. I guess this calculation has already been done for you and the extra is funded by an annuity.
If this is true you should take the take free lump sum as the pension is taxable. Then invest the lump sum in an ISA or other tax haven.
Perhaps you could spend it the government will always be a safety net anyway.
How long do you plan to live?
Depends on how old you are. The older you are, the better off you are with the cash of 52023 pounds.
The YOUNGER you are, the better off you are with the annually indexed pension of 10,940.
It also depends on the expected future interest rate and indexing -- the more inflationary it is, the more that favors taking the cash now.
Take the cash and invest it in Eastern European property.
I'd have though it better to take the money and put it in some high interest savings scheme. You should be able to get it back up to near the £10,900 annually overall and if you walk under a bus the money is there for your relatives to fight over, rather than you ex employers heaving a sigh of relief :o)
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