A return of 4.4% doesn't sound like much, but the longer you want that rate, the harder it will be to achieve it. Pensions are long term things both in building them up and when they're paying out, so don't forget the power of compounding and the fact the pension will pay out an index linked income for life, without you having to do anything to get it.
While your investments will probably need managing to one extent or another, which is likely to get harder as you get older. Plus, if you start spending that £20k, or the growth from it, then the required percentage return would need to increase to keep pace with the compounding effect of the pension.
29 Jul 2018, 15:51
Robert you make some good points about investment return and not spending your lump sum.
I have done some research and it would appear that a conversion rate of 1 to 25 is actually pretty good though, so I still believe that for some members taking some lump sum could be a good option, especially if their income in retirement is above the tax free allowance.
As always it’s down to an individuals personal circumstances when making their pension choices and doing your own research is important.
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