Lump sum 25% of what?

getting_old

Many years ago I was a member of my then companys retirement scheme and had set a date of 63 to retire.
Well I am almost there and they have written and told me that the only option I have is to take it all as a lump sum, we are talking about 18K here.
I have other pension schemes that will not pay out till I am 65, therefore I do not know whether this 18K will be above my 25% limit. If it is about that level it will stop me from taking any more lump sums from my other pensions when I may need the money more than I do now.
Am I right to think that the 25% rule applies to the total of all of my pension funds and therefore no decision can be really be made until I am 65.

Any ideas?

EdInvestor

getting_old wrote: »

Well I am almost there and they have written and told me that the only option I have is to take it all as a lump sum, we are talking about 18K here.

That's good news, is it all tax free?

Am I right to think that the 25% rule applies to the total of all of my pension funds and therefore no decision can be really be made until I am 65.

No.You can take 25% of each and every pension in tax free cash, in some cases you can take more.

LOST

yes- you are entitled to 25% tax free cash from any pension you hold.

It seems you are entitle to take 100% tax free cash from that pension of £18k - but that is not normally the only option - they give you the option to the whole lot as tax free cash, however, you do get option to take the whole lot as a pension or a mixture of the 2 to suit your needs. 9 times out of 10 - you should take the whole lot tax free unless its more favourable otherwise (ie Guaranteed Annuity Rates)

getting_old

Yes it is all tax free, yippee

Normally yes they do give options but in this case for some reason I had only one.

So if I have another pension relating to a different period of time worth lets say 100K, I will still be able to take 25K as a lump sum if I want to?

dunstonh

Exceptions to the 25% come when you have protected lump sum amounts in excess of that. I have had a number of NU replacement plans mature recently with lump sums of 75%-100% be available.

EdInvestor

getting_old wrote: »

So if I have another pension relating to a different period of time worth lets say 100K, I will still be able to take 25K as a lump sum if I want to?

Yes, maybe more.:)

getting_old

Many thanks to all, as advised I am now talking to an independent financial adviser.

thanks again