pension lump sum 30 January 2016 at 5:01PM in MoneySaving dads 3 replies 4.6K views

tara1964

my partner pays child maintenance. when he retires at age 55 in 4 years he will receive his private pension. He has the option of taking a tax free lump sum of around £50k then a certain amount each year. Will he have to pay 15% of his lump sum in child maintenance.?

Keep_pedalling

Pension lump sums are not counted as income so I doubt it. What is more if he really does retire at 55 on what looks like a tiny pension you CM payments are likely to fall significantly because of his reduced earnings.

Are you sure he is actually going to retire at 55? Unless this is a final salary scheme, which seams unlikely as they mostly pay out at 60-65, his total pension pot is going to be around £200,000 and after he has taken his lump sum, he is not going to have much more than £6000pa to live on.

In his position I would be looking at retiring later and building a better pension.

securityguy

"Unless this is a final salary scheme, which seams unlikely as they mostly pay out at 60-65"

There are plenty which have the option of retiring at 55, perhaps with with an actuarial adjustment to the pension, however. This covers many schemes which trace their history back to old civil service schemes; ie, privatised industries where the pensions of employees who were in post at the time of transfer out of the state sector were on equivalent terms. Someone who is 51 now and joined, say, BT (ie, PO Telecommunications) at 18 in about 1983 would be in this position.

For DB schemes, the lump sum is typically about four years' gross benefit, which implies a rather larger pension, and some schemes don't really give you the choice.

mgdavid

tara1964 wrote: »

my partner pays child maintenance. when he retires at age 55 in 4 years he will receive his private pension. He has the option of taking a tax free lump sum of around £50k then a certain amount each year. Will he have to pay 15% of his lump sum in child maintenance.?

what were the terms of the Financial Order agreed at the time of his divorce?