I have just retired from the government service at the age of 65 after rendering the 25-year service. In applying for retirement like in my case, there are two choices or options to make. One is 5-year lump sum and an old-age pension after 5 years. The other one is the 18-month cash payment and pension immediately. I have selected the latter, 18th-month cash payment. Is it a good option I have made?
I would have opted for the 5-year lump sum then pension after 5 years if there were no penalty, discount, or deduction. The money would at least be under my control. I can put it in a premium savings account or a government bond that will earn higher interest than regular savings account. I'll then withdraw on a monthly basis what I would have received as monthly pension. Life is full of surprises and we never how long we will be around. If I have the money, at least I will be in a good position to decide what to do with it. However, some retirees I know do feel more comfortable holding only so much amount as lump sum and prefer to have something coming in as monthly pension. Some of them are scared that they will be out of control once the money is in their hands. Some can't imagine how it is to live without a monthly salary.
The pension plan for non government workers here is 18-month lump sum and a monthly pension thereafter. If there is an option of 5 years, I would definitely take it because I get the advantage of holding the cash in advance. The money can already be used instead of waiting for the monthly pension. It can be invested in a business or for buying an asset such as a car or appliance.
I would have opted for what you've selected. To sustain the cost of living, I need a steady supply of money. Pension after 5 years is not a feasible idea to sustain when you do not have a income per month after retirement. However, if someone is economically sound to bear the monthly expenditure without a monthly pension, he/she could opt for the lump sum which could be used for a purpose.
@moondebi I would to inform you that I never regret why I have chosen the automatic pension. My retirement had taken place last October 2016 and now it is 5 months since that month I officially retired and I am receiving my pension every month without delay. It is better situation I have had as compared to during my incumbency as a regular government employee in which my monthly salary is sometime delayed.