Cashing in pension

Notebook

My sister is unemployed and is married. her husband earns about 40k a year. Because of that she gets no dole or any benefits etc.
She has been sent a letter from her previous employer (TESCOS) saying she has 18k in her pension pot.
She wants to get her hands on as much cash as possible now, or relatively soon. So don't really need advice on what she will do if she uses it up.
Therefore, I take it she can take 25% tax free. What if she wanted 50 or 100% - what tax would be taken?
Thanks

Mojisola

How old is she?

ScottyLP

Tesco pensions before 2016 were defined benefit - although the transfer value is £18k, the actual benefits may be worth more than £30K, so would need advisor sign off for.

atush

And she woould need to be 55+.

If he is working, and she isnt, is he claiming 1K of her personal allowance? 200 quid right there.

If she is not working, is she looking for work? If so, why no JSA?

Dazed_and_confused

"He" cannot claim any of her tax allowances.

She could apply and give away the allowance.

A small point but crucial having read the message some people posting on the cutting tax board have got themselves in by the higher earner applying for Marriage Allowance

Notebook

his job took them to ireland for a few years and she didn't sign on.. Then told she can't claim now they are back due to NI contributions? will check all the info with her later

Notebook

advisor sign off? can you explain..

also might be worth 30k... could you explain

thanks

p00hsticks

Notebook wrote: »

advisor sign off? can you explain..

also might be worth 30k... could you explain

thanks

Scotty LP has indicated (and I can't confirm or deny) that Tesco pensions before 2016 were Defined Benefit pensions - which means there is no 'pot' as such, but rather a guaranteed annual payout related to the number of years service and the persons salary.

Such pensions have an associated 'Cash Equivalent Transfer Value' (CETV) - if this is over £30k then legally if a person wants to transfer it to access money from it a person needs to get (and pay for) independent financial advice and hav the advisor sign off that this consulation has happened.

You need to clarify exactly what the £18k value your sister has quoted is (is it the CETV ?) and also how old she is - if she is under 55 then her getting hold of any money from her pension is all hypothetical anyhow

Notebook

She is over 55
She can take 25% so that's 4.5k leaving 13.5.
What is the 11.5? Could you explain. Thanks

badmemory

Firstly do not use Retirement Line. This should be reported as spam. He is including Pension Wise in that hopes that no-one will.

The 11.5k would be after tax. It would be paid using emergency code month 1. So 13.5K less personal allowance less one twelfth of 11.5k (so not taxed per month is£958). Then some taxed at 20% the rest taxed at 40% then some at 45%. Then when you receive the P45 from them reclaim from HMRC the excess over the £400 due.

This of course is supposing that doing this would be an evenly remotely good idea. I am sure this is a DB scheme which is unlikely to make it a good idea.

And don't forget the need to pay an IFA to sign it off. This may be a lot larger than you would expect because of their insurance and the number of people they are expecting to come back in a few years & claim missold!

xylophone

https://www.ourtesco.com/our-benefits/pensions/

Was she in the Defined Benefit Pension Scheme?

If so, has the Tesco Scheme confirmed that the value of her benefits is under £30,000?

https://www.pensionsadvisoryservice.org.uk/about-pensions/retirement-choices/the-right-choice-for-me/taking-a-small-pension-as-a-cash-lump-sum

Is she seeking to take a small pension as a cash lump sum?

https://www.pensionsadvisoryservice.org.uk/about-pensions/retirement-choices/the-right-choice-for-me/taking-a-small-pension-as-a-cash-lump-sum