25% Tax Free

Duffers57

My query is that my request was for the payment of my 25% tax free of my Sainsbury's final salary scheme pension. In their booklet "Your Options at Retirement" this would be defined as Option 2 which states "Under current rules you can usually take up to 25% of the value of your pension as tax free cash." My main Scheme benefits are identified on the quotation as £178,485.14 but the tax free cash under Option 2 of my quotation is £26,386.92 which is over £18,000 less than 25% of main Scheme benefit value.

Whilst I understand that final salary or defined benefit schemes are treated differently to defined contribution schemes this figure seems well short of what would be expected in this case and in fact that received when my husband has taken his 25% cash free from his final salary schemes.
Please could anyone in the forum advise why this might be ?
Thanks

Dazed_and_confused

What is your annual pension from this scheme?

Duffers57

£3958.11 per year

Marcon

Ask the scheme administrators - that's exactly the sort of query they are there to answer (and they have immediate access to the scheme rules and your personal details).

Duffers57

Thank you we have already written to them and asked the question.

Silvertabby

The first two reasons that spring to mind are:

1. You failed the GMP test for maximum tax free cash (only if you have pensionable service before 1997)

2. You haven't taken the commutation rate into account.

That said, the scheme 'value' of £178,485.14 and your quoted annual pension of £3958.11 per year don't seem to tally with a DB scheme.

As others have said, only your pension provider can give you the right answer.

Duffers57

Thank you that’s really useful

cloud_dog

I have a DB scheme and the TFLS is not a simple 25%. Mine is a calculation and I believe it is based on 4 x Pensionable Salary.

Pensionable Salary is because some of my salary does not count towards my final DB salary, one of those things they introduced in order to keep the scheme open (for existing members) but limit its exposure.

xylophone

https://www.jspensions.co.uk/sainsburys-pension-scheme/sps-your-retirement-options/


The booklet says

Option 2
Option 2a
With this option, you can exchange some of your pension
for tax-free cash. Under current rules, you can usually
take up to 25% of the value of your pension as tax-free cash.
If you exchange any of your whole pension for cash, this
will reduce the amount of pension you get from the Scheme.
Willis Towers Watson, our Scheme administrator, will give you a
quote that shows how much monthly pension you will get if you
take the maximum amount of tax-free cash.
You can also ask for a quotation that shows how much pension you would
get if you took a cash sum that is less than the maximum available.
The fact that you choose to take some of your pension as tax-free
cash will reduce the size of the pension that would be paid out to
your spouse on your death.
You can also exchange future increases for a higher starting pension,
but take some of that higher pension as tax-free cash instead. This
will reduce your PIE pension but it will still be higher than if you opt
for a normal pension with tax-free cash (Option 2).

The booklet gives no details of the commutation rate for the pension.

xylophone

OP, have you obtained a state pension statement?

https://www.gov.uk/check-state-pension

Duffers57

Yes I’ve read the Sainburys Pensions brochure, called them to find them most rude on the phone hence I’ve written to them to help explain.
Hi no I’m not receiving my state pension,