santander pension

joebob

The wife has a small pension £115 a year. Just had a letter from santander offering a one off cash lump sum of £3.700 , tax would be payable on this, also says she could exercise this optionin the future, she is 57. First thoughts are its a good idea. Any thoughts ?

xylophone

Is she already in receipt of the pension?

Linton

Looks a fair offer if the £115 is inflation linked or extremely good if it's fixed. Either way I would go for it. Losing £115/year isnt going to make any difference to your retirement plans, £3700 is nice to have.

joebob

xylophone wrote: »

Is she already in receipt of the pension?

yes, it is index linked as well.

xylophone

https://www.litrg.org.uk/tax-guides/pensioners-and-tax/how-do-i-cash-my-small-pension-trivial-commutation

If a trivial commutation lump sum is paid in exchange for a pension already in payment, all of it will be taxable as normal income in the year in which it is paid.

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

If benefits are in payment, the lump sum value of your pension will be added to the rest of your taxable income in the tax-year in which you take it when determining any income tax liability.