Pension lump sums

slaterp

Hi I am in the fortunate position to be receiving a pension and also working as well.
I received a pension lump sum back in 2001, £30K of which was tax free. I am now in a position where I can retire from work and draw my pension from my current provider. Will I be able to receive a tax free lump sum from my current provider?

Both pension schemes were final salary type.

jem16

slaterp wrote: »

Will I be able to receive a tax free lump sum from my current provider?

Yes you will.

jamesd

Tax free lump sums are normally available but it's often a bad idea to take them from final salary pensions. Often you get a fairly small lump sum compared to teh amount of income given up. If you can say what the options are it'd be possible to say which look like a good or bad deal.

slaterp

I'd need to request the figure if I wanted to re-invest the lump sum. The scheme normally gives a lump sum of 3 times the annual pension.

jem16

slaterp wrote: »

I'd need to request the figure if I wanted to re-invest the lump sum. The scheme normally gives a lump sum of 3 times the annual pension.

Some schemes won't allow inverse commutation which is what would be needed on schemes where the lump sum is automatic.

mania112

jem16 wrote: »

Yes you will.

Not for sure, there are providers who don't offer Annuity/Drawdown.

jem16

mania112 wrote: »

Not for sure, there are providers who don't offer Annuity/Drawdown.

The OP was talking about a final salary pension so nothing to do with annuity or drawdown.

However, out of interest, what pensions will not allow 25% tax free lump sum to be taken?

bigfreddiel

jem16 wrote: »

Some schemes won't allow inverse commutation which is what would be needed on schemes where the lump sum is automatic.

thats correct, and with the cs classic scheme the inverse rate at 60 is about 4.9%

now you could invest that in a s&s isa and over the long term it should grow at at least 5% if not more

it's a tricky decision - take lump sum or commute?

fj

kidmugsy

bigfreddiel wrote: »

it's a tricky decision - take lump sum or commute?

Unless there is some special feature such as debts to clear, poor health, family history of being particularly long-lived or short-lived ....

Interest rates are very low at the moment: there must be some people for whom a good wheeze would be to take the larger pension while borrowing the money to fund some long-desired purchase. The loan would be paid back out of the larger pension.

slaterp

Thanks for the comments its always a tough decision. Am I going to live for ever (in which case take the larger pension) or an I going to die tomorrow (in which case take the lump sum). Chrystal balls required I think.
The main answer is I should be able to take a tax free lump sum, when offered, and Mr Goverments not going to step in and want his slice.

Bigmoney2

jem16 wrote: »

The OP was talking about a final salary pension so nothing to do with annuity or drawdown.

However, out of interest, what pensions will not allow 25% tax free lump sum to be taken?

If by taking the full 25% lump sum it would make the pension in payment lower than the minimum income guaranttee then only a lower level of TFLS could be taken.