25% tax free of pension pot

LULULU1

Hi There,

How do you work out what your total pension pot is and therefore calculate your 25% tax free pension pot.

On my statement it shows my pension at 60 is £14,499 plus pension supplement of £1338.

It also shows me maximum lump sum of £72809 which would reduce my pension to £10,922.

Any help greatly appreciated.

Thanks

bigfreddiel

Just ask your pension provider maybe?

Or is this a fs pension?

fj

tacpot12

If you pension entitles you to a 25% tax free lump sump (and you know this for sure) your pension company has done the calculation for you already. Your maximum lump sum of £72809 is the 25% you are allowed to take out tax free. So your pension pot is 4 x £72809 or £291,236.

xylophone

A Defined Benefit Pension? Royal Mail?

http://www.royalmailpensionplan.co.uk/section-c/your-pension/understanding-your-pension

As a rough guide, value of a DB pension can be calculated as 20 x maximum pension.

Maximum lump sum 25% of £289980 = 72,495 which is very close to your offer.

dunstonh

The 25% tax free lump sum applies to money purchase schemes. Not defined benefit schemes. They have their own way of calculating which is designed to be broadly equivalent but should not be referred to as 25%.

hyubh

dunstonh wrote: »

The 25% tax free lump sum applies to money purchase schemes. Not defined benefit schemes. They have their own way of calculating which is designed to be broadly equivalent but should not be referred to as 25%.

A minor point, but this terminology ('25% of the capital value') is in fact the norm in public sector schemes. E.g.:

http://www.lgpsregs.org/index.php/regs-legislation/timeline-regulations-2014?showall=&start=5#reg33

See also the LTA limit.