Taking an increased lump sum

kostigovs

Wife due to retire shortly and has opted to commute part of her pension for an increased lump sum. The formula for calculating the maximum lump sum is pension x 12 + existing lump sum divided by 2.8. Straightforward enough so far.

Additionally she will have a private pension from which she can withdraw 25% tax free and my question is that if she decided to take the 25% does this have any effect on the increased lump sum i.e. reduce the maximum amount she can take or is the pension that would be payable from her private pension added to the occupational pension thereby increasing the amount of lump sum permissable.

Or does it have no impact at all

Zelazny

If they're separate arrangements, then it should make no difference at all

kostigovs

Zelazny wrote: »

If they're separate arrangements, then it should make no difference at all

I ask the question because on the application form for her lump sum it asks if she is applying for/in receipt of a lump sum from another pension

joedenise

I think that only really applies if you are anywhere near the lifetime allowance - it certainly was on my private pension quote.

Denise

RichandJ

joedenise wrote: »

I think that only really applies if you are anywhere near the lifetime allowance - it certainly was on my private pension quote.

Denise

It still has to be filled in though as each administrator needs to record the %age of LTA previously taken just to satisfy themselves that individuals aren't actually near the limit. Think of it as another free service provided to HMRC - they get the admin's to do the check.