Lump Sum Payments

Winchmore_Hill_Shot

Hello,

Sorry, not much of an expert on finances or pensions, but I am due to retire in a few months.  I currently have 3 different pensions, all based on current or previous employment.

Having been in housing tied to my employment for the last 30 years, I am looking to buy a house which means maximising my capital.  So my current plan is to take the 25% tax free lump sum from each pension.  Is there any complication, tax implication, I need to be aware of, or do I just instruct my various funds separately.

Across the three funds we are talking of an amount of nearly £200k.

molerat

You need to check the providers permit the withdrawal of only the tax free amounts.

Winchmore_Hill_Shot

Thanks, but I will be triggering the whole pension, not just the tax free amount.

Brie

Each scheme will have a different administrator normally and so each will need to be notified separately.  I had pensions from 3 different employers all being administered by the same company but I still had to give separate notices to each. 

Give yourself about 6 months for the process to work.  You'll tell them you plan to retire (for instance) 1st July, they'll send you papers to read and fill out and return, they ask some more questions and then when satisfied they will process the pension, which in itself might take 2 months.  It depends on the administrators and even with mine certain teams worked more efficiently than others for some reason.  

If there's a defined benefit scheme (DB) likely you'll have to put the pension into monthly payment at the same time you take the tax free sum.  With some defined contribution (DC) schemes you might be able to take just the TFLS and not the rest of the pension.  With one of mine I could really only take the whole pension over 2 tax years getting a TFLS with both payments.  It depends on the scheme rules.  

Start by giving them a potential retirement date and when you get all the paperwork come back with more questions.

ColdIron

Have you looked into the tax cost of such a move? You will be surprised

Where will your income come from once you have no earned income? Are you planning on just the state pension (a grim prospect)?

flaneurs_lobster

Winchmore_Hill_Shot said:

Thanks, but I will be triggering the whole pension, not just the tax free amount.

What do you mean by "triggering the whole pension"?

Brie

ColdIron said:

Have you looked into the tax cost of such a move? You will be surprised

Where will your income come from once you have no earned income? Are you planning on just the state pension (a grim prospect)?

Do you mean the fees involved with moving?  And the tax applied to the home purchase?  

I took the OP to mean that the £200k would be the total TFLS from the various pensions rather than that the intent was to cash in everything in one go - which obviously would be subject to very high tax.

Winchmore_Hill_Shot

Sorry yes the £200k is the TFLS from various pensions.  I will rely on the remaining pension for my income which I would look to begin at the same time (plus state pension).  My understanding is that this should give no tax liable on the lump sum.  Just checking that really.

ColdIron

Brie said:

ColdIron said:

Have you looked into the tax cost of such a move? You will be surprised

Where will your income come from once you have no earned income? Are you planning on just the state pension (a grim prospect)?

Do you mean the fees involved with moving?  And the tax applied to the home purchase?  

I took the OP to mean that the £200k would be the total TFLS from the various pensions rather than that the intent was to cash in everything in one go - which obviously would be subject to very high tax.

I read it as cashing in everything in one go

Winchmore_Hill_Shot said:

Thanks, but I will be triggering the whole pension, not just the tax free amount.

Edit: But now clarified by the latest post

dunstonh

Winchmore_Hill_Shot said:

Sorry yes the £200k is the TFLS from various pensions.  I will rely on the remaining pension for my income which I would look to begin at the same time (plus state pension).  My understanding is that this should give no tax liable on the lump sum.  Just checking that really.

Based on this information,

would it be drawdown or annuity?
if annuity, you would look to transfer the uncrystallised pension to the annuity provider and get them to pay the tax free cash.   And not do drawdown with each individual plan as you cannot combine multiple crystallised pensions into a single annuity.   i.e. 3 crystallised funds would result in 3 annuity payments.

Winchmore_Hill_Shot

dunstonh said:

Winchmore_Hill_Shot said:

Sorry yes the £200k is the TFLS from various pensions.  I will rely on the remaining pension for my income which I would look to begin at the same time (plus state pension).  My understanding is that this should give no tax liable on the lump sum.  Just checking that really.

Based on this information,

would it be drawdown or annuity?
if annuity, you would look to transfer the uncrystallised pension to the annuity provider and get them to pay the tax free cash.   And not do drawdown with each individual plan as you cannot combine multiple crystallised pensions into a single annuity.   i.e. 3 crystallised funds would result in 3 annuity payments.

Annuity is the current plan.   I had assumed, 3 funds with 3 sets of payments, unless anyone knows better.