Commuted pension

workaholic38

My husband is nearly 65 and has applied to commute his pension, he has got a letter back saying his pension is over £30,000 £31,144).  Does this mean he can apply again next year when it should be below this amount or does the figure never change?  Should we get pension advice or just give up!!  He gets £104 a month could really use a cash SUM!!  Thanks for any advice 

Andy_L

If the value of the pension drops below £30k he can apply again.

However it's unlikely that a defined benefit pension will reduce in value.

xylophone

My husband is nearly 65 and has applied to commute his pension, he has got a letter back saying his pension is over £30,000 £31,144).

Do you mean that your husband has a DB pension/other pension with safeguarded benefits and wants to transfer out to a personal pension?

What is the £104?

Dazed_and_C0nfused

I took it to mean the pension company have offered to buy out the pension in return for a one off (taxable) payment of £31,144.

So in reality closer to £27k (or much less) net of tax.

In return the op stops getting his £104/month.  Not sure if this is the actual pension or a net amount after tax?

Andy_L

Dazed_and_C0nfused said:

I took it to mean the pension company have offered to buy out the pension in return for a one off (taxable) payment of £31,144.

So in reality closer to £27k (or much less) net of tax.

In return the op stops getting his £104/month.  Not sure if this is the actual pension or a net amount after tax?

I though the OP's husband was currently getting £104 from somewhere else (job, benefits, another pension, bitcoin mining etc) & was looking at trivial commutation for their pension that they weren't yet taking

@workaholic38 can you clarify things a bit?

Tommyjw

You have asked to esentially trivially commute his pension in payment.

To do so, firstly the value of his benefits must be under £30,000 for HMRC purposes. This is quickly defined as 20 x the pension, this isnt specific just to his pension scheme, it is across the board on all Schemes. So 20 times his annual pension seems to be £31,144 = £1,557.20 per annum. I would assume the £104 per month you've given is after tax?. If so, the value of his benefits is too high to take it all as a one-off lump sum to start with so its a no go.

And as stated, his pension isnt going to decrease per year, so it's not ever going to be possible unless the £30,000 limit is changed.

But even if he was under the £30,000 amount when pension x 20 (unless it was so low it was under £10,000) it would likely still not be possible, because the £30,000 is counting all pensions he may have

The following is i think a fairly good lay persons read: https://www.litrg.org.uk/tax-guides/pensioners/how-do-i-cash-my-small-pension

workaholic38

Thank you so much for your replies, this explains a lot!  We didn't really understand the £30,000 rule and thought this amount would drop as money was paid each month!  To be honest we don't know if it's taxed.....  I don't think so as this is his only income!  Was a lovely thought for a while !!!

xylophone

To be honest we don't know if it's taxed.....  I don't think so as this is his only income!  

If his only income is under £1300 a year then he shouldn't be paying tax.

Does he not get a monthly/annual statement?

Has he obtained a new state pension forecast?

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

What exactly does it say?

Dazed_and_C0nfused

workaholic38 said:

Thank you so much for your replies, this explains a lot!  We didn't really understand the £30,000 rule and thought this amount would drop as money was paid each month!  To be honest we don't know if it's taxed.....  I don't think so as this is his only income!  Was a lovely thought for a while !!!

Are you paying tax?