Do the maths. The pension is basically risk free, so you need to use risk-free investments to calculate.
So, take £26K, and figure out how much you'd have if you invested it in gilts until retirement. Ten year gilts are just under 2%, compound it out. That gives you your lump sum at retirement.
Since interest rates are quite low historically, there is little risk that you'll do worse at retirement in buying an annuity than now. So take your lump sum and find out what it would buy in an annuity. And compare that to £2275 / year.
If it is more than £2275, take the lump sum now, and put it in a SIPP. If it is less than £2275, then you have to decide whether you want to use riskier investments to try to get more retirement income. If it is close to the same, do whatever is easiest.
So, take £26K, and figure out how much you'd have if you invested it in gilts until retirement. Ten year gilts are just under 2%, compound it out. That gives you your lump sum at retirement.
Since interest rates are quite low historically, there is little risk that you'll do worse at retirement in buying an annuity than now. So take your lump sum and find out what it would buy in an annuity. And compare that to £2275 / year.
If it is more than £2275, take the lump sum now, and put it in a SIPP. If it is less than £2275, then you have to decide whether you want to use riskier investments to try to get more retirement income. If it is close to the same, do whatever is easiest.
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