Taking a lump sum

Mrsbadger54

I would like some advice please. I have worked for a university for the last 25 years & paid into their pension. My normal retirement date is 2029 & I don't plan on retiring early although I am 55 this year. I previously worked for BAe & paid into a pension there for 2 years which I forgot about until recently. I contacted them & the amount I paid in has matured to £26,000 if I take it as a lump sum. I thought, as I turn 55 soon, I would be able to take it then, but they are saying, because I am entitled to a lump sum when I retire from my present job, & both, added together, are worth over £30,000, I can't take it. Has anyone had any experience of a similar situation? I would like to access one of my lump sums at 55 rather than wait until I'm 66.

kidmugsy

We need to know whether the Bae pension is a DB pension (e.g. Final Salary pension).

Silvertabby

It must be a DB scheme because they are quoting DB triviality rules - ie, combined notional value of ALL occupational pensions must not exceed £30K.

There's nothing OP can do about this - other than perhaps transfer the Bae pension into a SIPP and then draw down? However, just because you can do something doesn't necessarily mean that you should. OP will need to obtain a current pension forecast and a CETV (transfer value) in order to compare the two values.

Mrsbadger54

Sorry to sound a bit thick, this is all new to me, but what is OP?

soulsaver

Mrsbadger54 wrote: »

Sorry to sound a bit thick, this is all new to me, but what is OP?

Original Post(er), you in this case.

MallyGirl

if you did transfer to SIPP, once you take any taxable income out of a pension (beyond the 25% lump sum) you are limited on what can go in to any active pensions. Tread warily as you would not want to miss out on free money. I know nothing about FS pensions so maybe this isn't an issue for the uni one - someone more knowledgable will be along in a minute I am sure

Mrsbadger54

I'll ask for a Transfer Value Quotation from BAe & look into SIPPs, I think. I might look into transferring it into my Uni pension pot too. I look on it as money I didn't know I had so if I can put it to some use now rather than years down the line, all the better.

coyrls

I look on it as money I didn't know I had so if I can put it to some use now rather than years down the line, all the better.

Try looking at it as a pension that you didn't know you had that you can put to use when you retire, as that is likely to be the better financial decision.

Marcon

MallyGirl wrote: »

if you did transfer to SIPP, once you take any taxable income out of a pension (beyond the 25% lump sum) you are limited on what can go in to any active pensions. Tread warily as you would not want to miss out on free money. I know nothing about FS pensions so maybe this isn't an issue for the uni one - someone more knowledgable will be along in a minute I am sure

This catches out a lot of people! You are referring to the Money Purchase Pension Allowance - and the clue is in the name. If you draw any benefits from a defined contribution (aka money purchase) pension scheme other than the 25% tax free lump sum, you can then only get tax relief on a maximum of £4,000 of contributions a year to a defined contribution arrangement.

Doesn't apply to final salary (defined benefit) schemes.

westv

Just as a matter of interest, if you were (mad enough) to purchase an annuiuty, the MPPA doesn't apply? That's right?
What if you were to purchase a fixed term annuity?