25% tax free at 55

DeadSkull

I turn 55 this year & I want to take 25% of my s.e.r.p.s tax free to pay off a few things etc, I am disabled & on Universal credit so my question is Do I need to let them know I've taken the 25% of my s.e.r.p.s ? or will I be fine & can finally clear bits up & have a bit of spare change for once. Thanks.
P.S. I'm hoping this is the right place to ask if not will do it again under benefits section.

molerat

I think this is more about benefits than pensions.  Reported to be moved.

DE_612183

Do you know how much your 25% will be?

sammyjammy

SERPS is linked to state pension, you cannot take 25% of that at 55 or any age.

kaMelo

sammyjammy said:

SERPS is linked to state pension, you cannot take 25% of that at 55 or any age.

I'm assuming the OP means they contracted out of SERPS/S2P and they are referring to the private pension they built up with their NI rebate. (but I could of course be wrong)

How much will the lump sum be and what are you planning to pay off with it? 

(Whether taking the TFLS at 55 is a good idea is probably a bigger question)

NedS

If you take a 25% tax free lump sum from a pension as a one-off payment, it will be classed as capital for UC purposes. If this takes your capital over £6k then your UC will reduce, and if it is over £16k then your UC would stop completely.

You can use your capital (lump sum) to repay debt (e.g, credit card debt, bank loan, mortgage etc) and this is not treated as deprivation of capital as long as you repay the debt within the same UC assessment period as the lump sum is received. If you still have capital over £6k or £16k at the end of the assessment period, then the above applies regarding reduced or NIL UC entitlement.

What exactly do you mean by:

DeadSkull said:

 will I be fine & can finally clear bits up & have a bit of spare change for once.

DeadSkull

NedS said:

If you take a 25% tax free lump sum from a pension as a one-off payment, it will be classed as capital for UC purposes. If this takes your capital over £6k then your UC will reduce, and if it is over £16k then your UC would stop completely.

You can use your capital (lump sum) to repay debt (e.g, credit card debt, bank loan, mortgage etc) and this is not treated as deprivation of capital as long as you repay the debt within the same UC assessment period as the lump sum is received. If you still have capital over £6k or £16k at the end of the assessment period, then the above applies regarding reduced or NIL UC entitlement.

What exactly do you mean by:

DeadSkull said:

 will I be fine & can finally clear bits up & have a bit of spare change for once.

I mean will uc be ok with having a big amount of money to clear off debts & have some left over say to buy a car or have a good holiday.

DeadSkull

kaMelo said:

sammyjammy said:

SERPS is linked to state pension, you cannot take 25% of that at 55 or any age.

I'm assuming the OP means they contracted out of SERPS/S2P and they are referring to the private pension they built up with their NI rebate. (but I could of course be wrong)

How much will the lump sum be and what are you planning to pay off with it? 

(Whether taking the TFLS at 55 is a good idea is probably a bigger question)

kaMelo said:

sammyjammy said:

SERPS is linked to state pension, you cannot take 25% of that at 55 or any age.

I'm assuming the OP means they contracted out of SERPS/S2P and they are referring to the private pension they built up with their NI rebate. (but I could of course be wrong)

How much will the lump sum be and what are you planning to pay off with it? 

(Whether taking the TFLS at 55 is a good idea is probably a bigger question)

Over 10000 & paying off debts & im not worried about taking it at 55.

DeadSkull

I turn 55 this year & I want to take 25% of my s.e.r.p.s tax free to pay off a few things etc, I am disabled & on Universal credit so my question is Do I need to let them know I've taken the 25% of my s.e.r.p.s as it will be a big amount ? or will I be fine & can finally clear bits up & have a bit of spare change. Thanks.

LightFlare

Will that leave you with an adequate pension pot for when you do retire?

huckster

Yes you have to inform UC of changes to money savings and investments. There is an option to report this under the report a change section on your claims home page.  If the money, savings and investments total exceeds £16000 at the end of the UC assessment period, you would lose entitlement to UC and the claim would close. For money, savings and investments of £6000 to £16000, UC would apply a deduction  of £4.35 for each £250 held.

If you are in a position where the claim would close, if you currently have LCWRA, when you looked to reclaim UC when money, savings and investments dropped below £16000, you would have to go through a new Work Capability Assessment process.