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Deferred Pension
lotto
Posts: 102 Forumite
I have deferred my pension for 4yrs 10months and want to now use the lump sum to help my children.
I am still working and paying 40% tax.Can you tell me how to work out the tax on the lump sum and is this the right time to do it?
I am still working and paying 40% tax.Can you tell me how to work out the tax on the lump sum and is this the right time to do it?
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Is it a deferred pension or is it a money purchase pension where you have deferred the commencement from the original scheme age?
Are you referring to the tax free lump sum? (clue there)Can you tell me how to work out the tax on the lump sum
Or are you talking about accessing the taxable chunk of the pension?and is this the right time to do it?
And what other time would there be?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.0 -
It is my state pension which I haven’t claimed.
Is claiming before 5 full years a good idea?0 -
I still want to take my normal state pension, but use what I have deferred for the kids.0
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It can be complicated but on the face of it you will pay 40% in tax on the lump sum.0
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The lump sum from deferring the state pension is taxed at the same rate you would be taxed if you had not received the lump sum. In your case this would appear to be 40%. The only way to avoid it is for you to wait until the tax year when your income falls below the higher rate level.
As it appears that you reached State Pension Age before April 2016 in pure financial terms, assuming you are of average health, taking the deferment as an enhanced State Pension is a much better deal.0 -
Thank you!
If I enhance the pension, is there anyway I can help the kids now with a deposit for a flat?0 -
Thank you!
If I enhance the pension, is there anyway I can help the kids now with a deposit for a flat?
What other pension provision do you have apart from the state pension?......Gettin' There, Wherever There is......
I have a dodgy "i" key, so ignore spelling errors due to "i" issues, ...I blame Apple
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I have my work pension, don’t plan on retiring for at least 2 Years0
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Thank you!
If I enhance the pension, is there anyway I can help the kids now with a deposit for a flat?
If you took the enhanced state pension now it would be taxed at the higher rate. So there is no way whilst you are a high earner you could benefit the kids using your SP without paying higher rate tax.0 -
I am still working and paying 40% tax
Why not increase your contributions to your pension?
https://www.which.co.uk/money/pensions-and-retirement/personal-pensions/contributing-to-a-private-pension-explained/tax-relief-on-pension-contributions-explained-a27f53z7qg3f
You could pay less tax and enhance your pension.0
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