Age 55 Can i take a 25% lump sum from my company pension?

bandos2007

Hi

I hope someone can provide an answer to this question. I am in a defined benefits company pension scheme and have been for 20 years. I have enquired about taking a 25% lump sum now as I am over the age of 55 and they have said that I cannot do this. Who is right?

Thanks in anticipation

Margaret

PeacefulWaters

They are..

hugheskevi

I have enquired about taking a 25% lump sum now as I am over the age of 55

Your pension scheme doesn't work like that.

You will probably be able to reduce your annual pension income in exchange for a tax free lump sum. Whether or not this is a good idea varies according to circumstances and individual schemes (the exchange rates can be so poor that it is better to keep the income and pay tax than exchange and take it tax free - this is particularly the case in the public sector schemes).

You may also have an automatic lump sum built-up (it depends on your scheme's rules). If so, you may be able to convert some income into lump sum anyway, up to a limit.

they have said that I cannot do this. Who is right?

HMRC set the tax framework, and within that tax framework you are permitted to commence your pension and take a lump sum after age 55. However, this is permissive rather than conferring a right. Your scheme may or may not permit you to commence your pension at age 55. It may be at the discretion of your employer. In your circumstances it seems your scheme/employer does not permit you to commence your pension. Your scheme administrator should be able to explain what particular rule prevents you from accessing the pension.

The scheme rules and literature should set out the conditions under which you can access your pension. Read in particular about partial retirement.

jamesd

The scheme rules govern. It is unusual for a defined benefit pension to allow taking a lump sum except at the time of also commencing taking the main pension income, so the response you received is the likely one.

If you are either so ill that you can't work and aren't likely to be able to work until retirement age for the scheme, or if your doctors have diagnosed you with a medical condition that they think gives you less than a year to live, say more about those things, since that can dramatically change the options available.