Help! Defined benifits lump sum tax rules

tone461

Hi,

Just took early retirement and have 3 pensions.

Pensions 1 & 2 both Final Salary and I have planned to take a lump sum 25% from each plus a monthly pension from each.

Pension 3 is a money purchase and cashing it in. The provider is taxing me at 40% rate and I have to contact HMRC to get a refund if they agree it should have been 20%.

The question is can I take 25% from two seperate final salary pensions at the same time??

xylophone

You can take 25% of each pension arrangement tax free.

https://www.gov.uk/claim-tax-refund/you-get-a-pension

jamesd

You can take 25% tax free lump sum from any number of pensions at any time.

It may well not be best to take 25% from the final salary ones. Often the exchange rate for converting long term income into a lump sum is very bad. If you say what the income levels are with and without lump sum and what the lump sum is for each we could tell you if they look like good or bad value.

Usually it's cheaper to borrow money than take lump sums from final salary pensions, but not always.