At Grumpy Guts' suggestion here is a summary of the pros and cons of deferring a C Plan + AVC pension, as I currently understand them. If you are aware of other pros and cons please add to the discussion as this may help future employees (as well as me) when they come to make their decisions.
Pros
o Your pension will be bigger when you start to draw it because you will be older (the early retirement factor will reduce the pension by smaller amount).
o Your pension will be largely index-linked during deferral whereas it will lose out against inflation once you start to draw it. (The index linking takes place on each anniversary of leaving IBM, I believe).
o You may reduce the tax payable on any money you earn after retirement.
o If you have earned enough in the tax year of retirement to push your pension income into the 40% tax bracket, the increase in pension you get later may represent a particularly good return on the pension income forgone. You may choose to time the drawing of benefits to allow you to minimise tax both in tax year in which you leave IBM and in the following tax year.
o The Friends Provident MVR may have reduced by the time you come to draw your pension ie the reduction will be less - you might even get the full fund value.
o (If you die before you start to draw the pension the whole of the fund value will pass to your beneficiaries.)
Cons
o You may want/need the money to live off.
o You may not live long enough to break even.
o When you come to draw the pension the rate that IBM uses to convert your AVC fund to pension may have changed to your disadvantge (we are living longer).
o If you leave funds with Equitable Life, Equitable Life may impose further penalties, reducing your ultimate pension.