Pension and Refundancy

Supergran62

I am 62 years old and am being made redundant soon. I want to put a lump sum from my redundancy into my defined benefit pension and only withdraw the tax free allowance from my pension without having to take my monthly pension payments. I haven't been given this option 

Can I do this without penalties or without having to take monthly payments from my pension until I choose to take it?

molerat

With DB pensions you generally have to commence the monthly pension when taking the lump sum.

Ayr_Rage

It was the same with my DB scheme, if you took a lump sum then the pension had to be paid too.

If the question about doing it without penalties refers to taking the pension before the scheme's normal retirement date then it's likely there will be a reduction for taking benefits early.

DRS1

Supergran62 said:

I am 62 years old and am being made redundant soon. I want to put a lump sum from my redundancy into my defined benefit pension and only withdraw the tax free allowance from my pension without having to take my monthly pension payments. I haven't been given this option 

Can I do this without penalties or without having to take monthly payments from my pension until I choose to take it?

You might want to specify what pension scheme you are in.  I am guessing it is a public sector scheme since most defined benefit schemes in the private sector are closed.  There are people on here who know an awful lot about eg the LGPS.

What would your contribution to the scheme do?  Would it buy extra years, an early retirement break or go into an AVC?

If it is going into an AVC can you take what is in the AVC as a tax free lump sum?  and can you take it at a time when you do not take the main scheme benefits?  Some AVC arrangements allow that - goodness knows why.

You would need to read the scheme documents to know what is what and then ask the people who run the scheme if you can do what you want (assuming it isn't obvious from the documents that you can't.).

An alternative might be to put it in a SIPP but then you could only take 25% of the pot tax free with the other 75% providing taxable income