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Tax free lump sum

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Hi,
I've been teaching for over 20 yrs and am 56 yrs old. I've recently moved to Sydney to continue my career and would like to access my 25% tax free lump sum.
Mt pension pot is over $400,000 but when I contacted TP, they offered me £57,000 instead of the £100,000+.
I don't understand!
anyone else faced this?
many thanks Kevin

Comments

  • Drp8713
    Drp8713 Posts: 902 Forumite
    Ninth Anniversary 500 Posts
    Teachers is an unfunded public sector defined benefit pension scheme. You dont have a pension pot and cant transfer out (with a few exceptions).

    Your 25% is calculated by finding 25% of the capital value of the pension, as you are taking the pension before the normal retirement age the benefits will be reduced for early payment and therefore the maximum lump sum will also reduce.
  • atush
    atush Posts: 18,731 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    you would have to commence the pension, and would be taxed on that income. Which would be reduced by up to 50%?

    So dont take it early?
  • jamesd
    jamesd Posts: 26,103 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    edited 3 August 2015 at 11:53AM
    Access without restrictions at 55 and a 25% tax free lump sum are features of personal pensions and workplace defined contribution pensions. The teachers' pension is not this type, it's final or average salary.

    For the teacher's type of pension:

    1. There is a "normal retirement age" (NRA).
    2. There is a substantial penalty that increases for each year the pension is taken before NRA.
    3. The lump sum may well not be 25%, it's not calculated in that way.
    4. There isn't really a pot, just a transfer value to be used in divorce calculations.
    5. Transferring unfunded public sector pensions like TPS has been banned starting from 6 April 2015 [STRIKE]2016[/STRIKE] so that transfer value can't be used for actual transfers now.

    Because of the reductions for taking the money early it's usually better to borrow money from other sources than take the lifelong income cut from taking the pension before normal retirement age.
  • jem16
    jem16 Posts: 19,629 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    jamesd wrote: »
    5. Transferring unfunded public sector pensions like TPS has been banned starting from 6 April 2016 so that transfer value can't be used for actual transfers now.

    Presumably you meant to type 6 April 2015 james?
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