Question on Pensions

Rachias

Hi there
When you claim an occupational pension you are usually offered to take an annual pension plus a lump sum. Does anyone know if you have to take the lump sum and how you work out what your total annual pension would be if you didn't take the lump sum.
Thanks very much.

Aegis

Just ask the pension provider for an illustration of both. Remember, though, that the lump sum you receive would be tax free, while an increased pension would be taxed as income. It might be worth considering that as well as the other factors.

Andy_L

Depends on the scheme rules. Some oblige you to take a pension and lump sum, others give you a pension and the option to" trade-in" pension (called commutation) by sacraficing pension. For every £1 of annual pension you give up you get £x of lump sum. This exchange rate varies from scheme to scheme

Rachias

Thank you Andy and Aegis for your replies. I will contact pension provider.
Regards Rachias.