Lump sum rumours!

chucknorris

Aceshigh wrote: »

HI, can anyone help. I currently work for the London Ambulance Service and there have been rumours of the good old Government changing the rules next year on lump sums in that they plan to tax quite a large amount of it. I have tried contacting my pensions department but they are not answering the phone.
Does anyone know if this is true ?

Aceshigh:A

I am in the TPS (Teachers' pension scheme) you would have to hold a gun to my head to get me to take the 25% lump sum, at a conversion rate of 1:12 (£1,000 pension cost per £12,000 of lump sum taken) it is terrible value, it is far better to take the £1,000 as pension income.


What is your conversion rate? Is it compulsory to take the lump sum?

saintalan

Would this affect any Cash guarantees of greater than 25%, could the government change that?

I have an S32 BOP which the only benefit in keeping it is the above. (Options already checked on another thread.) It is available to me now, I have just kept it invested for now.

Would starting a Flex Drawdown before the changes help protect it or otherwise?

Thanks

Alan

elantan

gadgetmind wrote: »

Sounds like said boss needs to learn a little more employment law.

https://www.gov.uk/retirement-age

I could obviously very well be wrong as I don't know the law and am not an employer ...But the guy isn't fit to work just now and my understanding is they plan on telling him when he reaches retirement age that he can't stay on due to health reasons .... Although it has also been mentioned that he isn't fit to work just now and is basically only being kept there to let him build up some money .... The guy is a walking stroke/ heart attack waiting to happen and if he were to do the job he is employed to do he would have dropped down dead by now ... They have him working on a different job till his retirement

But that doesn't take away the fact he has squandered his lump sum and has a very small pension left

elantan

Reading that link I see it says " however some employers can set a compulsory retirement age is they can justify it" I think health is a justification and the fact he can't job the job he is paid to possibly is covered as well ?

gadgetmind

elantan wrote: »

Reading that link I see it says " however some employers can set a compulsory retirement age is they can justify it" I think health is a justification

Maybe, but you can't set this age on a per employee basis.

As for squandering his lump sum, that was his choice and (given everything else) perhaps not a bad one.

BobQ

kidmugsy wrote: »

Does this imply that the unions in the NHS assume their own members to be peculiarly gullible?

You have no reason to think this rumour has anything to do with any union. It undermines your arguments if you come out with prejudiced comments like that.

elantan

gadgetmind wrote: »

Maybe, but you can't set this age on a per employee basis.

As for squandering his lump sum, that was his choice and (given everything else) perhaps not a bad one.

I totally agree it is his choice it was his money ... However, knowing this person you would soon realise that a lot of his choices are the reasons why his health is the way it is

eastcorkram

As this is a thread about the lump sum (sort of), I'll ask this question in here!

Are there some pension schemes that do not offer the option of any lump sum? The reason I ask is this......one of the previous pensions I have (paid into from 1979 to 1990) send me a statement each year. The most recent one states that it will pay a pension of about £3500 per year when I reach retirement age. Each year that figure goes up a little, as I think it is increased with inflation. There is lots of info on this statement. Even a transfer value, which is about £44,000. Assume it's not wise to move this into current company scheme??

BUT, no where in any of the figures, does it mention the possibility of taking a tax free lump sum. I'm not sure that I'd take one anyway, as I think the increased income would be the better option. Just curious as to why it never gets a mention in the statements.

BobQ

Linton wrote: »

The government has announced it's proposals for next year's pension rule changes. They dont include any change to the 25% tax free lump sum.

The proposals for next year dont affect Defined Benefit pension schemes anyway.

Strictly there are some aspects of DB schemes affected by the consultation document such as preventing transfers to DC from public (and perhaps private) DB schemes and increasing the minimum age at which benefits can be drawn possibly to 5 years below SRA..

Its possible that the rumour mentioned by the OP relates to possible measures to limit the ability to transfer to DC schemes, even though it would make little sense for most people. The consultation document refers to the possibility of allowing such transfers but then restricting the flexibilities to those in current DC schemes (which means higher withdrawals would not be tax free).

greenglide

eastcorkram wrote: »

Are there some pension schemes that do not offer the option of any lump sum?

Yes - I am in one.

The scheme quotes a retirement amount and says that you can give up an amount to fund a lump sum up to 25% and the cost of this would be supplied if asked. The lump sum can be funded by AVC contributions which is (as stated by the scheme) the better buy.

Common amongst private schemes for the lump sum not to be automatic.

Public sector employees that I work with all seem to be counting the days until they get the lump sum - they are convinced that this is worth more than the pension. Planning to buy a Laborghini? Go figure?