Taking my pension in one lump sum.

Shedman

As an aside, assuming your wife is working and earning more than the £10,600 PA, have you applied for the Marriage Allowance to transfer some of your PA across to her - especially as from your replies it seems you won't be in a position to utilise any of it yourself this current tax year?

andygb

There is some excellent advice here which also saves me from creating another thread.
I have a lesser amount, and would like to cash in part of it to pay off my mortgage (only a £35 exit fee for me to pay for early redemption).
I have been speaking to the pension provider and they have said that I need to look up UFPLS for a calculation.
I didn't actually ask them about cashing in part of it, but I assume that I do not have to cash in the whole amount at once?
We are also unemployed but have run out of things to sell (car and possessions), and we do not want to lose the house, so this seemed the ideal solution.

stoddy2k01

Hi Shedman.
The answer to the wife getting more than £10600 per year is yes she does and No she doesn't claim for my share of the Tax allowance.
I was only made aware of this being possible yesterday. I did wonder as i have been unemployed for 6 yrs would i be able to claim anything for the previous years.

jamesd

andygb wrote: »

I have been speaking to the pension provider and they have said that I need to look up UFPLS for a calculation.
I didn't actually ask them about cashing in part of it, but I assume that I do not have to cash in the whole amount at once?

UFPLS is one way of taking money. You can't just take the 25% tax free lump sum but instead have to take a mixture of 25% tax free and 75% taxable. The alternative is flexible drawdown that lets you take the 25% tax free lump sum then the rest whenever you like, which can be more convenient for tax planning.

Yes, nothing in law requires that you take it all at once. It's a good idea to take only a little at first if you use UFPLS. That way HMC will have time to send them a notice of coding so they won't overcharge income tax as required by the rules if they don't have one. That can avoid the hassle of claiming a refund from HMRC.

andygb wrote: »

We are also unemployed but have run out of things to sell (car and possessions), and we do not want to lose the house, so this seemed the ideal solution.

Anyone on means tested benefits should read DWP benefits and pension freedom and ensure that you understand how DWP will treat taking money from pensions. You'll need to read the full DWP guidance linked from there. You're going to have to carefully time how often you take it and how much you take at a time so you don't get it considered as income (use an irregular schedule, not regular) on the one hand and also don't go over the savings limit on the other (so know the limits for the various benefits and don't take out enough to go over them at one time). Also note that you're required to tell DWP and your council if applicable about when and how much you take out. If under pension credit age there's no compulsion to take it, it's just your choice.

andygb

Thanks jamesd, with regard to the DWP, I intend to use whatever I get back to pay off the mortgage and not stash any away in savings, because at the moment we are getting no help from anyone with regard to paying our mortgage.

jamesd

Right, but you do need to ensure that you do not go over the limits at any time, including the time between taking the pension money and paying something off the mortgage. And to watch out for the timing so it isn't treated as income because you took it regularly.

I think that paying off a mortgage might be an acceptable use of the money anyway but you'd need to confirm this with DWP.