Confused between "Cash Lump Sum" and Small Pension Pot. Please Help

Legacy_user

deleted. deleted

couriervanman

cash lump sum

xylophone

He has the right to access before age 55 on account of his severe ill health?

https://www.pensionsadvisoryservice.org.uk/content/publications-files/uploads/Taking_small_pensions_Quick_SPOT012_V1.7.pdf may help.

couriervanman

Monthly or yearly pensions from £1700 £170 £120 isn't going to much.....about £100 a year
Take the money treat your self/grandchildren or go holiday

couriervanman

Cash lump sum

xylophone

See

http://www.taxvol.org.uk/about-tax/cashed-small-pension/

With regard to tax, if it is deducted from one or more of the pensions, your husband will need to check his total taxable income to see if he has overpaid/underpaid etc.

couriervanman

cash lump sum........as it says £1600 one off payment
small pension pot........probably about £80-100 a year

GibbsRule_No3

How did you take the larger sums, that you accessed? Are you really saying you took those in full and are now asking if you should take £1600 rather getting such a small return for the rest of his life per year? The larger pots were the ones you might have considered taking as a pension per year, not these tiny ones. Take the money and treat yourself.

Dazed_and_confused

I think the op is under the impression that each option will result in payment of the full amount, not a regular amount.

But is unsure of the difference between the two.

Obviously if the op ever gets round to telling us which companies are involved they will stand a much better chance of getting the reply they want.

Shaztastic

xylophone wrote: »

See

http://www.taxvol.org.uk/about-tax/cashed-small-pension/

With regard to tax, if it is deducted from one or more of the pensions, your husband will need to check his total taxable income to see if he has overpaid/underpaid etc.

Read this link. The small pension pot option is a variation of trivial commutation for pots that are under £10k.

xylophone

Can anybody please explain the difference between taking money as a-

1/ Cash Lump Sum
and
2/ A Small Pension Pot

Have you read the link?

It explains "small pot".

The point about small pots is that a person can take up to three of these without triggering the Money Purchase Annual Allowance but in your husband's circumstances, this may not be a concern.

The tax treatment will not be different - 25% of each tax free with the balance taxable - if tax is taken off by the provider then your husband will need to check his overall tax position and contact HMRC if necessary.