Small Funds Lump Sum ?

Lara-

kidmugsy wrote: »

Does one really get back the money spent? We're updating our kitchen and bathroom, but it's for us not for our successors. For all we know they'll bin our improvements anyway.

We're hoping it does.

kidmugsy

Just a thought: what is the pension invested in? If it's in a share fund (equity fund), say, you might like to move over into a cash fund. That's because (i) if the shares rocketed upward you'd go over the £18k limit; if they crashed, you'd lose money.

Lara-

kidmugsy wrote: »

Just a thought: what is the pension invested in? If it's in a share fund (equity fund), say, you might like to move over into a cash fund. That's because (i) if the shares rocketed upward you'd go over the £18k limit; if they crashed, you'd lose money.

The Options Statement reads;

'final bonus amounts are not guaranteed and are adjusted to match the overall plan payout to the asset share (the underlying value of the assets,stocks,shares,bonds,cash etc that support the plan's share of the overall fund) earned on the plan since its inception

Would that mean it's a share fund ?

jamesd

You can use triviality on any number of pensions in the one year from the time you take the first one. So you can do one then do the other(s) a little later. So that's why you'd use triviality twice, once for each piece.

You should move part and take one part this tax year. That's because the personal income tax allowance is lost if not used each year. So take the first one soon after 18 March but before 5 April, then the second one after 6 April. But start the transfer as soon as you can because those take a little while to happen, possibly months sometimes, so you need to allow for that time.

Your personal allowance is a little higher next tax year but the gain isn't much compared to splitting and taking triviality lump sums from each part in different tax years.

kidmugsy

Lara- wrote: »

The Options Statement reads;

'final bonus amounts are not guaranteed and are adjusted to match the overall plan payout to the asset share (the underlying value of the assets,stocks,shares,bonds,cash etc that support the plan's share of the overall fund) earned on the plan since its inception

Would that mean it's a share fund ?

It sounds to me like a With Profits fund. They can be tricky because you have no control over the size of the final bonus. Maybe jamesd can recommend action: I'd guess that you could ask them if there are any fees or penalties for transferring and then consider moving the lot to, say, Hargreaves Lansdown. From there you could move a chunk to someone else. I'm assuming that your current provider wouldn't let you move out in two goes, but I could be wrong - it's only an assumption.

wallpaperman

With respect to Jamesd who offers a lot of good advice on all things pensions, I would ask your provider to calculate the tax they would deduct.

The reason I say that is the pension provider I work for deducts tax on the balance at a straight 20% regardless of your tax code position, and provides a P45 for you to claim back from the HMRC.

EG. £12952.18 x 20% = £2590.44 tax deducted.

Not sure how other providers work, but worth checking. Does your quote not advise the tax deducted in the small print, I know ours do?

You should eventually end of up in the same position that Jamesd detailed, but it may need you to claim a refund or wait for HMRC to do it automatically as your pension provider will also give HMRC details of the tax they have deducted from you.

molerat

Trivial lump sums are taxed at BR wef April 2013, emergency xxxM1 tax code was used previously, and any overpayment needs to be reclaimed in year using a P53 which is available on line. http://www.hmrc.gov.uk/manuals/rpsmmanual/RPSM09105080.htm

jamesd

Wallpaperman. I think you're right that it will be deducted at 20% then has to be reclaimed. That'll be a simple as a letter to HMRC with the details and copy of the documents, along with details of a bank account to pay the money into.

If this is the sort of partial transfer to save tax is something that your firm would like to be involved in please take this as an invitation to contact me privately with cost and contact details and if it makes sense I'll pass them on here.

jamesd

There's a very cheap option to do this: Fidelity. No charge for triviality.

xylophone

Another thought - will this money affect your guaranteed pension credit or any other benefits you might be receiving?

http://www.ageuk.org.uk/money-matters/claiming-benefits/means-tested-benefits/