RMPP are my calculations correct - lump sum cash in hand

[oliel]

I got a pension illustration and just wanted to check if my calculations are correct.
I
llustration showed the following
Option 1 Annual pension from your
RMPP benefits £1678
Leftover cash from your Cash
Balance fund £27,554.53

Option 1a annual pension £1,678.81 tax freee cash from your cash balance £11,788.87 leftover cash balance £15,765.66


Option 2 annual pension £1,263.15 tax free cash from rmpp benefits £9,017.78 leftover cash from cash balance fund £27,554.53


So I'm trying to work out how much lump sum cash I would end up with in my hand with each option after tax- I would be paying tax at 21%

my calculation for option 1 is £23206
my calculation for option 1a is £24240
my calculation for option 2 is £32345

Just wondered if anyone can confirm if my calculations are correct

Many Thanks

[RobertT]

It sounds like you've realised since you started your other thread, that you will be paying tax on the Cash Balance.

The amounts you've quoted as 'left over from Cash Balance' are paid out as a UFPLS, which means 25% of that is also tax free.

So in the case of option 1, you'll get £6,888 tax free with the remaining £20,666 being classed as income and added to your other income and taxed accordingly.

I'm sure you can work out the other two options yourself.

You mention tax at 21%, which suggests you're in Scotland?
If so, the 21% band is earnings between £29,527 - £43,662, while £43,663 - £75,000 is at 42%.

So as only you know what you're current income is, only you can work out much your tax liability is after you've taken the pension and Cash Balance. But it looks like you'll pay 42% on some of it!

The rest of the UK is:
£12,570 - £50,270 = 20%
£50,271 - £125,140 = 40%


*UFPLS – Uncrystalised Funds Pension Lump Sum.

*You'll also have some Age65 benefits via the RMSPS.

*There is also the option of transferring out the Cash Balance to a personal pension, which depending on how and when you access it, may be a way to at least avoid the higher rate of tax.