Pension Lumpsum.

9or10

Hi does anyone know if the initial lump sump (about £50K) is taxable and at what rate.

Thanks for any help.

BrokenArrows

9or10 wrote: »

Hi does anyone know if the initial lump sump (about £50K) is taxable and at what rate.

Thanks for any help.

You can take 25% of your pension pot tax free. Anything over that is taxed as if it was income.

9or10

Thanks for the quick reply BA;)

Just Retired

Hi There
If the Pension lump sum amounts to €200,000,or less it is Tax Free,and above this is taxable as income. So the 25% rate is the maximum that you can obtain, the Pension pot would therefore be €800,000, you can opt for less or none at all,depending on your personal preference.The balance,if you take the lump sum,can be used to purchase an Annuity, or Invested in an ARF/AMRF fund. Various web sites such as Irish Life have a vast amount of information on these products. My advise would be to contact a reputable Independant financial adviser, who charges a fee for his/her advice on such matters. This way the adviser is not tied to any particular pension provider,but lays out all the options for which you can decide for yourself what you do with the fund.

If the pension scheme was what is called a Defined Benefit one, then the 25% of the available fund may not apply.These are final salary schemes and in this case 1.5 times of the final salary determines the amount of the lump sum. In some cases the average gross salary over the final 3 years, can determine the exact amount. It will include bonus/overtime,and may include the company car's value as well,but I am not sure on this,Gross salary is applied in these examples.Average Salary in last 3 years of employment 1) €45,000 2) €51,000 3) 3)€53,000:Total €149,000 divide by 3 = €49,666 x 1.5 =€74,500, which will be the Lump sum. As with these D.B. schemes an annuity is purchased for the retiring member, so no financial advice will be required,however it may be prudent to do so,in order to ensure all is ok, and the fund delivers what was set out for you over your working life, again a fee will be forthcoming to the Financial Adviser. I hope this helps.

9or10

JR thanks for the comprehensive response.

As you say, my pension is linked to my salary when I left (The Post Office) and the UK Govt. then pays the pension based on that final salary.

Now I probably could do better but I am loathe to gamble as I just hate losing - I don't even do the lotto

Just Retired

Hi There
In my last reply, the figures as set out only apply to Ireland of course. In your circumstances do check out what is applicable to you.

Regards J.R.

9or10

Sure JR. The pension would be paid here in ROI.

CIARAN_BOYLE

9or10 wrote: »

Sure JR. The pension would be paid here in ROI.

Well then it depends on if the lumpsum paid out matches Irish law for a lumpsum.

9or10

CIARAN_BOYLE wrote: »

Well then it depends on if the lumpsum paid out matches Irish law for a lumpsum.

Hence the thread.