24 Jul 2020, 09:25
24 Jul 2020, 13:45
24 Jul 2020, 15:11
24 Jul 2020, 16:13
RobertT wrote:You can take a lump sum worth anything from 0% to 25%, I think the forms give you 3 options:
1. No lump sum and maximum pension.
2. Maximum 25% lump sum and minimum pension.
3. Something in between of your choosing.
I don't think there's a set commutation rate for exchanging pension to lump sum, I think it can vary depending on age and other factors?
But if you use a ratio of 1:20 you should be in the right ballpark.
24 Jul 2020, 16:48
freespeech wrote:Am I right in thinking that the best option to maximise income will always be to take the max lump sum?
By doing this you would earn interest off that sum and your tax liability for the pension would be reduced too (assuming it was above your personal allowance).
Given the 25% is tax free anyone that has a smaller lump sum to maximise pension and pays tax would be overall worse off. You could use the LS to subsidise the pension back up to the amount you would have had but without paying tax.