Taking a 25% tax free lump sum

Adamskiodp

First please forgive my ignorance around this subject.

I currently work full time in the NHS and plan to retire in about 10 years time.

As I understand things, this is my current (non state) pension status.

I have two NHS pensions.

The 1995 NHS pension is frozen as a new pension scheme was introduced in 2015.

The 1995 NHS pension is static but I continue to pay into the 2015 NHS pension scheme.

I also have a third pension from when I previously opted out of SERPS. I no longer pay into this as the opt out scheme was cancelled some years ago. This is a Protected Rights Plan (COPPS).

Can I withdraw 25% of my third (COPPS) pension and leave the rest there to continue growing until I actually retire (likely another 10 years)?

Will this have any effect on my NHS pensions?

The company that holds the COPPS pension say I can take 25% tax free with no effect on the rest of the pension or my NHS pensions, except for any future tax liabilities when I decide to retire.

This third pension is with Re Assure (previously wth GAN) and is currently valued at just over £100,000.

If I did withdraw the 25% tax free lump sum, would I be better off leaving the balance with Re Assure until I want to claim a regular pension or would it be better with a different provider, or even just withdraw the lot and put it in a long term savings account (or similar)?

Sorry for my ignorance.

Marcon

How old are you?

DRS1

Your age matters because generally you have to be 55 or over to take anything out of a pension.

If ReAssure are telling you you can take the 25% TFLS now why are you asking on here if it is possible? If you hadn't already checked, people on here would most likely tell you to do that and pay more attention to ReAssure than to us (well me anyway).

One thing I would say is that the contracted out personal pension schemes tend to be old fashioned pensions so it would not be a surprise if they had said that in order to take only the 25% TFLS out of it you would need to move it to a more modern scheme and certainly if you wanted to take some form of drawdown a more modern scheme would be needed.

If you take the rest of that pension as drawdown or an annuity then you will pay tax on it. Taking it while also earning taxable pay from the NHS isn't very tax efficient. If you don't need it then don't do it.

The same could be said for taking the TFLS. Do you need it for something? If not, why take it? Are you thinking of putting it in an ISA?

And if you take the taxable bit of the pension via drawdown then you will trigger the MPAA. That may not matter if you are in the NHS pension scheme as I do not believe it is a DC scheme but it could become relevant if you change jobs to one with a DC scheme.

dunstonh

Can I withdraw 25% of my third (COPPS) pension and leave the rest there to continue growing until I actually retire (likely another 10 years)?

Yes and no.

Most Reassure plans don't support drawdown. So, whilst you can do that, it will likely require you to transfer it to a modern pension that supports drawdown. That said, there are some Reassure plans (albeit a minority) where some drawdown functionality is available.

The company that holds the COPPS pension say I can take 25% tax free with no effect on the rest of the pension or my NHS pensions, except for any future tax liabilities when I decide to retire.

That is a good answer by them as they are correct. A lot of people use the tax free cash as part of their retirement planning. However, you won't be able to do that if you have blown it during your working life.

xylophone

The 1995 NHS pension is frozen

The 1995 NHS pension is static

Neither static nor frozen - Preserved.

https://www.nhsbsa.nhs.uk/sites/default/files/2024-05/1995-2008%20Members%20Guide%20%28V25%29%2005.2024.pdf

I also have a third pension from when I previously opted out of SERPS. I no longer pay into this as the opt out scheme was cancelled some years ago. This is a Protected Rights Plan (COPPS).

"Protected Rights" are no more.

Until 6 April 2012, the part of your pension rights in the COPPS that derived from rebates you received on your national insurance contributions (NICs) were subject to special rules known as "protected rights". The rules and restrictions relating to protected rights were abolished on 6 April 2012 so the PR became ordinary rights.

However, as other posters have commented, yours is an old policy (written back in the nineties?) so is unlikely to offer the flexibility of a modern plan.

Has Reassure given any guidance on whether you would need to transfer to a new plan so as to have flexible options?

Taking the tax free PCLS would not affect your ability to continue to contribute to your current NHS pension scheme.