Taking Lump sum Question

[dipsy]

I have my figures for taking my pension early at 55. i have the option of a tax free lump sum and take the extra but have it taxed. it then says this is paid sixteen weeks later. does that mean you get your tax free straight away and get the taxed part 16 weeks later. Thanks in advance .

[Wullie10]

If you continue working the tax part of the lump some could push you in the 40% bracket depending on your income. Can you defer this ?

[dipsy]

If you continue working the tax part of the lump some could push you in the 40% bracket depending on your income. Can you defer this ?

my income wouldnt put me into the 40% bracket. It just wasnt clear on the payment, do you get you tax free lump sum straight away when your 55 and get the taxed 16 weeks later or is it 16 weeks for both.

[July 1981]

You get the tax free lump sum when you take your pension, if you are taking UFPLS then this is paid sixteen weeks later, it is quite easy to move into the 40% tax band as I have recently found out. If you’re section B you can commute your lump towards your pension and use your cash balance towards your tax free lump sum, reducing the remaining cash balance, I did for NRA 65 so not totally sure if this is possible for NRA 60, I would put any specific queries you have to Robert who is very knowledgeable.

[RobertT]

If you’re section B you can commute your lump towards your pension and use your cash balance towards your tax free lump sum, reducing the remaining cash balance, I did for NRA 65 so not totally sure if this is possible for NRA 60, I would put any specific queries you have to Robert who is very knowledgeable.

The DBCBS is 'attached' to the RMPP, so can only usually be taken alongside the 2012-2018 element of your Age65 benefits. The other two years of Age65(2010-2012) are paid by the RMSPS.

As the RMPP can also be responsible for some inflationary increases to RMSPS Age60 benefits, there is the theoretical possibility of some DBCBS being able to be taken with them.
You will be advised as to if and how much, at the time of taking your pension.

The original idea of the DBCBS was that it could be used to fund the tax free lump sum with all Age60 and Age65 benefits in a similar way to AVC's. But the Cabinet Office, who are in charge of the RMSPS, refused permission for it to be taken with those benefits.

[NWpostie]

Can you commute your NRA65 lump sum ino your pension for a bigger monthly pension payment ?

I'm in section C and 38 years in job, I have £50k flexiplan and £11k bonus plan saved up, what's the best option I plan to retire at 60 so have about 3 years to save up further in CDC lump sum booster and £30 a week in AVC.

What's the best option for me and to avoid the 40% tax.

[dipsy]

Thanks for all your advice its much appreciated.

[RobertT]

Can you commute your NRA65 lump sum ino your pension for a bigger monthly pension payment ?

Section A/B members can commute some or all of their standard lump sum into more pension. But it's not possible to use the DBCBS to do the same, unless you transfer it out and buy an annuity(pending the £30k advice rule).

I'm in section C and 38 years in job, I have £50k flexiplan and £11k bonus plan saved up, what's the best option I plan to retire at 60 so have about 3 years to save up further in CDC lump sum booster and £30 a week in AVC.

I would guess that most if not all, of your £61k in AVC's can be used to fund the tax free cash with Age60 benefits.
The DBCBS will then be for the Age65 lump sum, with the excess paid as a UFPLS.

Use the method here to work things out: viewtopic.php?p=1116877#p1116877
The principle is the same whether you're working out Age60 + AVC's, or Age65 + DBCBS.

What's the best option for me and to avoid the 40% tax.

Assuming you plan to use your AVC's and DBCBS to fund your lump sums, I doubt if the total of your RM pensions on their own will put you anywhere the 40% tax band.
So it'll depend what other income you have in the tax year/s you access your pensions.

[streetwalker]

Dipsy.. how did you get your figures?
I’ve called and just get an automated message saying they can’t help with figures over the phone since the new pension on 7th October started ?

[RobertT]

If you can't get through over the phone, just use the online form on the RMPP website.

[dipsy]

Dipsy.. how did you get your figures?
I’ve called and just get an automated message saying they can’t help with figures over the phone since the new pension on 7th October started ?

I phoned 03456030043
After that first message just stay on the line and you will get more options.