Help please

[jchewitt1967]

I want to take the highest lump sum and all my cash balance, but don't understand these options. Can someone please break each option down .

[vmaxv4]

On your latest pension statement (Squirrel) what was stated as your cash balance amount?
Also is the quote from RMPP?

[jchewitt1967]

About 28k , but I want to understand what the 3 options are on the form I've shared.

[vmaxv4]

About 28k , but I want to understand what the 3 options are on the form I've shared.

From what you’ve shared it’s hard to say.
Is there more paperwork available?

[RobertT]

My reading of that is:

Option1 pays out just a pension, therefore the DBCBS would be paid as an Uncrystalised Funds Pension Lump Sum, which means the first 25% of that is tax free with the remainder being classed as income and taxed under normal PAYE rules.

Option 1A pays out the same pension, but uses the DBCBS to fund the tax free cash, with the remainder being taxed.

Option 2 pays out a tax free lump sum from the pension hence why it's reduced compared to 1&1A figures. The DBCBS would then be paid out as an UPFLS as above.

I hope that makes sense?

Why the DBCBS isn't specified on options 1 & 2 is unclear, but that's how it would normally be paid out in those circumstances!

As has already been asked, is there any more paperwork that suggests what I say is correct?

[jchewitt1967]

Hey , that's great thanks. Yes there is more paperwork, I'll post it later when I get home . Cheers.

[Rob]

I'm in the same predicament at the moment.What option did you pick to get the maximum lump sum? I reckon for me it's option 2 because i assume you get the reduced pension to give tax free cash plus all of the DBCBS at 25% tax free and the rest taxed. Does that sound correct?

[renrag40]

Isn't the option about paying out the cash balance as an UFPLS on the other side of the page from options 1 and 2?
If your cash balance was £28,000 as an UFPLS then you would receive £7,000 tax free and pay your nominal tax rate on the remaining £21,000..... £4,200 in tax leaving £16,800.
You would eventually receive £23,800 out of £28,000 but that assumes you pay 20% tax on the £21,000.
So if you ticked option 2 and also took the cash balance as an UFPLS you would get roughly £1550 per year pension and a lump sum of roughly £32,000.
You are giving up £455 per year pension for roughly £6,000 in extra lump sum. That a conversion ratio of just over 1:13.
This all assumes that you pay 20% on the £21,000 ..... if it takes you beyond £50,000 earning for the year you will pay the remained at 40% tax. Thereby making the conversion rate lower than 1:13.