Waive right to future lump sum on redundancy?

Rookie1

I'm taking redundancy shortly in my job and you have to make the choice on the pension element relating to the entitlement to apply for a lump sum at a future date.
Option 1 is to keep the option to apply for the lump sum on retirement, (tax incurred is negligible <€100 based on my figures)
Option 2 is to waive the right to apply for a lump sum (tax free based on my figures)
I'm a long way off the retirement age, so I expect to have a separate pension in my next job.
As there is little difference in the two payments, I'm guessing keeping the option to claim a lump sum in the future makes more sense?

The J Stands for Jay

You should be able to get a statement from the trustees of the pension scheme showing the lump sum you might get at retirement. It should help you decide if it's worth giving up to save a bit of tax now.

My own opinion would be not to waive your lump sum.

Cycleman

Hi I would like to know why I should have to pay tax on Net present value of tax free lump sum of pension now, on being made redundant, when I wont be getting any payment from the pension until actual retirement date.

The J Stands for Jay

You're not being asked to pay tax on your pension lump sum.

When you are made redundant, you are entitled to a statutory redundancy payment tax-free. If you don't have a future pension lump sum, this tax-free 'allowance' can be increased by €10,000 or by an amount determined by your salary and length of service. To my mind, this seems fair, as people who haven't benefitted from the tax breaks associated with pensions get to pay a bit less tax on their redundancy payment.

For people who do have a pension lump sum payable in the future, the increases are reduced to take into account their future tax-free lump sum.