Pension and divorce
I used to think I was fairly ok on understanding pensions but seem to have lost the plot and would appreciate some interpretation.
I am getting divorced and we are still working through the financial settlement - amicably!
We are both retired and get state pension in just over a year.
I keep the house, and my husband has agreed to transfer his smaller pension pot to me. He has had a valuation and the provider has said
I could keep the pension with the existing provider ' Should you choose an internal transfer the benefits would be invested into a DC fund. You would then have the option to either:
· Take the fund as a one off lump sum payment, 25% of which would be tax free the remaining 75% would be taxed at basic rate; or
· Purchase an Annuity with an Annuity Provider. The annuity rates will be different depending on the provider she opts to transfer the benefits to meaning the pension value would change.
The value of pot is £160,000.
Does this sound right? I could take the whole amount out of the DC fund and only pay basic rate tax ( 20%) on the amount above the TFLS? I have asked him to go back to the provider and query it .
I have my own DB pension of around 16k so with state pension the cash is looking like a better option re passing it on to the children, but not if most of it goes on tax