I don't understand!

freccle

I have been told I have a deferred pension from 12 miserable years spent in the Civil Service about 25 years ago. I've been told the lump sum is roughly £6250 and a monthly payment of about £200 a month.
(I'm 60 by the way so would be due this now anyway)
Do I have to choose between the lump sum and the monthly payment or do I get both?

As £6000 is not likely to keep me in the manner to which I'd like to become accustomed over the next few years I’d like to take it and take the grandkids to Disneyland. However I believe you can only take 25% tax free. Does this also apply if, like me, you are earning below the level where you start paying income tax? If I took 25% now tax free to pay the deposit on the holiday, would I still pay tax on the other £4500 when I took it out next tax year, even though the £4500 would mean I was still below the minimum tax threshold?

Keep_pedalling

You will get the lump sum, tax free and the monthly payment which is indexed linked. Do not even consider blowing any of your pension on Disneyland,

50Twuncle

freccle wrote: »

I have been told I have a deferred pension from 12 miserable years spent in the Civil Service about 25 years ago. I've been told the lump sum is roughly £6250 and a monthly payment of about £200 a month.
(I'm 60 by the way so would be due this now anyway)
Do I have to choose between the lump sum and the monthly payment or do I get both?

As £6000 is not likely to keep me in the manner to which I'd like to become accustomed over the next few years I’d like to take it and take the grandkids to Disneyland. However I believe you can only take 25% tax free. Does this also apply if, like me, you are earning below the level where you start paying income tax? If I took 25% now tax free to pay the deposit on the holiday, would I still pay tax on the other £4500 when I took it out next tax year, even though the £4500 would mean I was still below the minimum tax threshold?

You get the lump sum and monthly pension - which in itself is a good deal (it is index linked to the CPI)
http://resources.civilservice.gov.uk/wp-content/uploads/2014/05/YCPBE.pdf

freccle

Keep_pedalling wrote: »

You will get the lump sum, tax free and the monthly payment which is indexed linked. Do not even consider blowing any of your pension on Disneyland,

Yes but how far is £6000 going to get me? My husband had bowel cancer last year that so far is in remission but we never know what might happen. this would be my only opportunity to take the kids.

50Twuncle

freccle wrote: »

Yes but how far is £6000 going to get me? My husband had bowel cancer last year that so far is in remission but we never know what might happen. this would be my only opportunity to take the kids.

It's better than a kick in the teeth - many people don't receive any lump sum at all - what you need to do is calculate what you think you should have received - how many years did you work for the civil service for and what was your final and average salary ?
I am assuming that they are basing it on your final salary .....??

atush

freccle wrote: »

Yes but how far is £6000 going to get me? My husband had bowel cancer last year that so far is in remission but we never know what might happen. this would be my only opportunity to take the kids.

It will get you 6000 quid farther than zero. It could buy a car, pay for help around the home if you are working, maintain the fabric of your house.

You should have savings built up over your lifetime, if you do not then this is a lifeline for you- dont blow it.

If he has a pension, or Life insurance, and is terminal he can draw these funds.

margaretclare

It will grow, if you put it somewhere - no shortage of suggestions on this site.

Disneyland/DisneyWorld etc - total rip-off. The kids don't NEED to go to Disneyland! Plenty of other lovely places closer to home to go for a holiday. If Disney could charge you for breathing they would.

I agree with those who say - don't do it.

greenglide

Does the OP understand that the £6,000 lump sum is actually a true lump sum, payable in its entirely at your retiring date tax free? This is the equivalent of the 25% tax free lump sum that you see in DC schemes or the defined benefit schemes which have no automatic lump sum.

Additionally you will receive £200 each and every month for the rest of your life with increasing in line with inflation. If your spouse should outlive you they will normally get half that per month.

The £6,000 should pay for a trip to Disneyland (or do you actually mean Disney World)?

So what, exactly, is the problem?

sandsy

The civil service is a final salary pension scheme - you get the tax free lump sum and a regular pension.


Enjoy your trip!

xylophone

You are receiving the standard lump sum and not buying any additional lump sum?

http://resources.civilservice.gov.uk/wp-content/uploads/2014/05/YCPBE.pdf

If you want to spend your lump sum on the "holiday of a lifetime" for you and your family, ( and can afford to do so) then why not?

If it is Disneyland that "floats your boat", and you are prepared to accept the cost of charges/extras, then again, why not?

It seems sensible to take the opportunity when you are fit and well enough ( and your grandchildren young enough) to enjoy it?

mumps

If you don't need the £6k for anything else then I think taking the grandchildrne to Disney is a fantastic idea. I took my two youngest kids and grandchildren a few years back. We had a fantastic time and memories are priceless. We have been on other holidays and have great memories or lots of places so it doesn't have to be Disney but if that is what you fancy then go for it.