Army Pension

[manutd2465]

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?

[Kathyan]

Personally, I would go for the larger lump sum. That way you will be paying less tax per month. Can I be cheeky and ask what rank you are/were? Just wondering how much my OH will be getting!

[dzug]

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.

[manutd2465]

I am/was a SSGT, there is a pension calculator online, ask for a military pension calculator on any search engine, answer the questions and it will tellyou how much you can expect

[Loosehead]

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?

[boro1986]

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

[Mrs_Pegasus]

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.