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Tax free lump sum
Comments
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Suppose you live another 30 years. You get £20 but have given up an after-tax £30 x 0.8 = £24. I'd prefer the lump sum EXCEPT that your future income would have been inflation-protected whereas your lump sum might not be, depending on your investment success.
So if the MPAA is not reduced by taking the DB pension another option would be to take it as soon as possible with a commuted lump sum and whilst still working pay 100% of salary up to the £40k maximum into the stakeholder scheme?
Personally I prefer the idea of a commuted lump sum up front rather than extra income which takes many years to catch it up.0
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