People’s pension Lump Sum Retirement Benefit

kitty5

Hi there all
my husband is almost 65 and The people’s pension has written to him advising him that he is able to take this tax free benefit on his 65th birthday onwards. This was a fund he paid into in the 80s that The people’s pension took over.
He also has an ongoing pension  pot with them with his current employer that the he pays into. He isn’t retiring and as a higher rate tax payer he also pays into an Aviva pension for tax relief reasons and wants to continue to do so whilst he is working. 

If he takes the Lump sum Retirement Benefit tax free will that affect him leaving all the other pensions as they are and continuing to pay in to them whilst working?
Hope that makes sense. Thanks for your help in advance.

Cobbler_tone

kitty5 said:

Hi there all
my husband is almost 65 and The people’s pension has written to him advising him that he is able to take this tax free benefit on his 65th birthday onwards. This was a fund he paid into in the 80s that The people’s pension took over.
He also has an ongoing pension  pot with them with his current employer that the he pays into. He isn’t retiring and as a higher rate tax payer he also pays into an Aviva pension for tax relief reasons and wants to continue to do so whilst he is working. 

If he takes the Lump sum Retirement Benefit tax free will that affect him leaving all the other pensions as they are and continuing to pay in to them whilst working?
Hope that makes sense. Thanks for your help in advance.

He can do that without impacting his current arrangements. As long as he doesn't draw anything down beyond the tax free amount. 

dunstonh

my husband is almost 65 and The people’s pension has written to him advising him that he is able to take this tax free benefit on his 65th birthday onwards. This was a fund he paid into in the 80s that The people’s pension took over.

The People's Pension didn't take it over.  However, they did rebrand. It would have been the Building and Civil Engineers' (B&CE) Lump Sum Retirement Benefit Fund if it's from the 1980s.     It was often referred to as the Holiday scheme due to its origins.

If he takes the Lump sum Retirement Benefit tax free will that affect him leaving all the other pensions as they are and continuing to pay in to them whilst working?

The LSRB is independent of the auto-enrolment scheme.

Marcon

Cobbler_tone said:

kitty5 said:

Hi there all
my husband is almost 65 and The people’s pension has written to him advising him that he is able to take this tax free benefit on his 65th birthday onwards. This was a fund he paid into in the 80s that The people’s pension took over.
He also has an ongoing pension  pot with them with his current employer that the he pays into. He isn’t retiring and as a higher rate tax payer he also pays into an Aviva pension for tax relief reasons and wants to continue to do so whilst he is working. 

If he takes the Lump sum Retirement Benefit tax free will that affect him leaving all the other pensions as they are and continuing to pay in to them whilst working?
Hope that makes sense. Thanks for your help in advance.

He can do that without impacting his current arrangements. As long as he doesn't draw anything down beyond the tax free amount. 

There's nothing to draw down. This quaint little scheme provides a one-off tax free lump sum of 100% of the fund at age 65. Pity there aren't more like it!

kitty5

Thanks everyone. So I’m correct in thinking that he can take the LSRB and it won’t affect anything else that he has as it’s tax free.
So rules start to apply once you take any part of your pension that IS taxable? 

Aretnap

kitty5 said:

Thanks everyone. So I’m correct in thinking that he can take the LSRB and it won’t affect anything else that he has as it’s tax free.
So rules start to apply once you take any part of your pension that IS taxable? 

Broadly yes, once you take taxable money in a flexible manner you are restricted to paying in £10,000 per year in future, including tax relief and employer contributions. 

"In a flexible manner" leaves a few getouts that don't trigger the reduced allowance, including: 

Taking a defined benefit pension 
Taking taxable money in the form of a lifetime annuity and
Taking a very small pension pot under the "small pots rule" (though not a small amount of money from a larger pot)