Recent Changes To Pension Law

christina360

Looked for this info, but can't find a difinitive answer. So does someone know about this.

I understand that a small pension fund, in this case between £7K-£8K can be taken as a lump sum provided other pensionable income does not exceed
£15K per annum. This is in respect of a small 'paid-up' policy that has been sitting with Abbey Life for the last 15-years or so. So can I take this lump sum when I retire completely next year, instead of having to use it to purchase a (very) small annuity. Can someone help with this.

Thanks.

dunstonh

I understand that a small pension fund, in this case between £7K-£8K can be taken as a lump sum provided other pensionable income does not exceed
£15K per annum.

Not quite. You can take the pension as a lump sum providing the values of all your pensions do not exceed 1% of the lifetime allowance. This tax year has the lifetime allowance at £15mill making the figure £15,000. However, it is the value that matters, not the income. Plus all pensions you have must be taken in a 12 month period for this to apply.

This is in respect of a small 'paid-up' policy that has been sitting with Abbey Life for the last 15-years or so. So can I take this lump sum when I retire completely next year, instead of having to use it to purchase a (very) small annuity.

options:
1 - dont take the annuity next year. Leave it invested and take it later in your life to give you a payrise. If you die before then, the full value is paid outside of your estate for IHT.
2 - investigate transferring the Abbey Life pension to your other scheme (or alternative if Abbey Life can be bettered - which isnt difficult).