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Army Pension
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I am about to recieve the paperwork from the army for my pension, I have to choose between a large (tax Free) lump sum of �49000 and a taxable allowance of approx �600 per month, or a smaller (tax free) lump sum of �32000 and a larger taxable allowance of approx �900 per month. What do I choose?
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No best answer has yet been selected by manutd2465. Once a best answer has been selected, it will be shown here.
For more on marking an answer as the "Best Answer", please visit our FAQ.Can you invest the extra �17000 to get �3600 pa which is what you are giving up? I doubt it.
Bear in mind you will have to live on whatever you get per month (plus state pension presumably) for the rest of your life.
Unless you have an impaired life expectancy (ie don't expect to survive very long) or have other long-term sources of income, I'd go for the extra monthly income.
Bear in mind you will have to live on whatever you get per month (plus state pension presumably) for the rest of your life.
Unless you have an impaired life expectancy (ie don't expect to survive very long) or have other long-term sources of income, I'd go for the extra monthly income.
From a purely fiscal point of view take the 900 per month, you would not be able to safely earn 300 per month from 17k . You are getting 50% more per month, till death, if you save the extra 300 for 52 months at a pessimistic rate of 4% you will have the extra 17k anyway and after that you are 300 per month better off for ever. No contest. However it depends on your circumstances, for example do you actually need the 49k now? can you live on the 600? is there other income?
I am to a soldier still got 12 years to go tho!!! Me personally i would comute the lot for the following reasons:
Pay less tax
You will be arould 40 so you will get another job/career
The lower pesion will pay some of your bills
It rises when your 55
A soldiers life expectancy is only 57 so spend it while your alive
Hope this helps
Pay less tax
You will be arould 40 so you will get another job/career
The lower pesion will pay some of your bills
It rises when your 55
A soldiers life expectancy is only 57 so spend it while your alive
Hope this helps
My husband left in August and had the same figures as you. We took the larger lump sum to enable us to put a large amount away for a deposit and also to pay off a few outstanding loans just in case he never got a job.
Fortunately, before he left, he landed a job that puts him on the same wage (and a bit more) and now we have the pension as well.
Good Luck.
Fortunately, before he left, he landed a job that puts him on the same wage (and a bit more) and now we have the pension as well.
Good Luck.