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Lump Sum Pension Advice Please......

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Just need some advice with regards to taking the lump sum element from my pension.

I am in a final pension salary scheme and my lump sum is going to be 70k.

I also have another pension fund that i paid into separately and that total i can draw out will be 16k. I hit the big 55 in August and want to take out as much as i can given its tax free for now!

Am i able to take both lump sum amounts out?

Many thanks in advance.

Comments

  • robin61
    robin61 Posts: 677 Forumite
    The pension commencement lump sum for your DB scheme is tax free.

    If you have a separate private scheme 25% of that can normally be taken as a PCLS as well. However the rest is classed as income whether you take it as an Annuity or as drawdown. So it will count towards the £11K per annum personal allowance you have before you pay tax.
  • LHW99
    LHW99 Posts: 5,197 Forumite
    Part of the Furniture 1,000 Posts Photogenic Name Dropper
    For final salary schemes it depends on the scheme rules, and is likely to be reduced if you take it before the scheme's normal retirement age
  • xylophone
    xylophone Posts: 45,599 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    Is 55 Scheme Normal Pension Age?
  • dunstonh
    dunstonh Posts: 119,591 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    I hit the big 55 in August and want to take out as much as i can given its tax free for now!

    So, you want to take it out of a tax free environment to bring it into a taxable one?
    Can you access it without penalties at 55? (55 is early for most defined benefit schemes and you would expect a penalty).
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • londondealer
    londondealer Posts: 203 Forumite
    Part of the Furniture Combo Breaker
    I'm thinking I need some advice and good advisors out there?
  • mania112
    mania112 Posts: 1,981 Forumite
    Part of the Furniture Combo Breaker
    it's unlikely you'll be able to take the tax-free cash without also triggering the taxable income too, on the DB scheme.
  • jamesd
    jamesd Posts: 26,103 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    I am in a final pension salary scheme and my lump sum is going to be 70k.
    You will find that you will not be allowed to take the tax free lump sum without also taking the income. It's usually a bad move to take anything out of a defined benefit pension before its noramal retirement age. Borrowing tends to be cheaper in part because the reduced income is for life while the borrowing interest is for less time.

    For most defined benefit pensions it's also a bad idea to take a lump sum but there are some exceptions. Usually the commutation rate of lump sum to income given up is poor.
    I also have another pension fund that i paid into separately and that total i can draw out will be 16k. I hit the big 55 in August and want to take out as much as i can given its tax free for now!
    Assuming that this one is a money purchase pension, not another defined benefit pension it's fine to take out the tax free lump sum if you have a good use for the money. Bad uses would normally be things like paying off a mortgage.

    Given that you'll be 55 soon you're in a great position to pay lots of money into a personal pension to maximise your tax gain.
  • bigfreddiel
    bigfreddiel Posts: 4,263 Forumite
    dunstonh wrote: »
    So, you want to take it out of a tax free environment to bring it into a taxable one?
    Can you access it without penalties at 55? (55 is early for most defined benefit schemes and you would expect a penalty).

    Don't the police force retire at 55?

    In the civil service I think we lose 5% for each year early you take your pension, and by that I mean the Classic scheme, it's probably different now. fj
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