03 Sep 2019, 22:22
04 Sep 2019, 04:27
04 Sep 2019, 09:11
RobertT wrote:If you take your RM pension/s before Normal Retirement Age(NRA) they get reduced by 5% per year. So taking both at exactly age 56 for example, means a 20% reduction on your NRA60 and a 45% hit on your NRA65.
Generally and based on averages, it's best to leave them until NRA to get full value for money.
But ultimately it's your choice!
The Pension Commencement Lump Sum(PCLS) is tax free and therefore doesn't count towards your income for tax purposes.
The pension itself will be classed as income and potentially taxed, but that would depend on how much total income you have.
In practice anything you earn over the Personal Tax Allowance will be taxable, and that figure currently stands at £12,500 per year.
So if you take all of your RM pension of £1,374 and add that to your current gross earnings, you'll know if you'll pay tax or not.
Income tax is payable at 20%, but there is no National Insurance to pay on pension income.
Sometimes income tax is automatically taken off by an employer or pension provider when it shouldn't be. If that's the case it should sort it self out over time, or if not, get in touch with HMRC and tell them and they'll either issue a refund or change your tax code accordingly. https://www.gov.uk/claim-tax-refund
Per annum just means per year, although you actually get your RM pension paid monthly. So in your case it should be £114.50 gross per month in total. Which will go up by inflation each year.
04 Sep 2019, 14:51
malnuman wrote:Thanks Robertt, that is really helpfull, ..... so if I just go for the NRA 60, I would get the £7,798 - 20%, in one lump sum?
and would any of this effect me when it comes to my normal state pension at 65?