Civil Service Premium Pension - Tax free element?

tamste

When I started taking my CS Premium pension in 2020, I only took a small amount of cash as a lump sum leaving the rest to pay my pension. I worked part time for two years whilst taking the pension before I gave up work altogether.

With the 25% tax free lump sum element, should some of my pension be tax free? I am currently paying tax on all of my my pension, which doesn't seem right.

Marcon

tamste said:

When I started taking my CS Premium pension in 2020, I only took a small amount of cash as a lump sum leaving the rest to pay my pension. I worked part time for two years whilst taking the pension before I gave up work altogether.

With the 25% tax free lump sum element, should some of my pension be tax free? I am currently paying tax on all of my my pension, which doesn't seem right.

With a defined benefit scheme, you get one chance to take tax free cash - at the point you start taking the benefits from the scheme. After that all income from the scheme is (potentially) taxable, if your income during the tax year exceeds the personal allowance.

bjorn_toby_wilde

CS premium is a defined benefit pension. If you do a little reading on the Mineyhelper site you’ll get a better understanding of the differences between Defined Benefit and Defined Contribution pensions.

Your pension is one of the best there is in terms of inflation protection and taking the lower lump sum was very likely to be an excellent decision because of the low commutation rate.