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PostPosted: Mon May 17, 2021 6:37 pm 
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Luger Lout
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Joined: Tue Dec 23, 2008 6:00 pm
Posts: 22365
Location: Swindon
Car Models: alletsE. 2007 Manual 9-5 LPT
I had a letter today telling me that my pension pot is worth £410 odd.

It could be worth £385 when I retire.

Huhh? Where do they get their sums from?

Can I cash the £410 in this week?

This makes sense to me... £410 this week has got to be worth more than £385 when I retire in just over five years. :roll:

I won't be able to retire when I am 65. Methinks I am down for retiring at 67. Anyhoo...

Can I cash the £410 in soon?

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PostPosted: Mon May 17, 2021 7:09 pm 
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Joined: Sun Jan 26, 2014 9:41 am
Posts: 5299
Location: Royal Tunbridge Wells
Car Models: '03 9-5 2.3 Vector Auto Estate Noob Stg 1, Suzuki S Cross, '81 TR7 DHC
I think you can cash in your pension from 55 (or is it a proportion?). Obviously you will not actually get a pension then.
I'm no expert. I do have a pension which would have been good but then got stuffed by the company cutting back in various ways and then they closed it 'to further accrual' 10 years before I retired. No so good when you cut the benefits and then close it.

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PostPosted: Mon May 17, 2021 10:24 pm 
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Auto Sergei
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Joined: Wed May 12, 2004 9:46 pm
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Location: Mulbarton,Norfolk
Car Models: TTid's only now :-(
If your 'pot' is below a certain size (£30,000?) you can take the whole lot as a lump sum from 55.

For bigger pots you can take up to 25% as a tax free lump sum (up to 25% of £1,073,100)

Anything in the pot above £1,073,100 is taxed at 25% when you crystalise it, and a further 40% when you take the cash (so 55% in total)

Interesting fact (well to me) I learnt a few weeks ago, old age pensions are taxable income. I'd always assumed they were live benefits and tax free.
But the HMRC adjust you tax free allowance down by the size of you OAP.

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PostPosted: Tue May 18, 2021 12:59 pm 
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Light Pressure Turbo

Joined: Tue Aug 14, 2012 6:07 am
Posts: 474
Location: Nr Gatwick
Car Models: 83 Saab 99 GL
wrighar wrote:
Interesting fact (well to me) I learnt a few weeks ago, old age pensions are taxable income. I'd always assumed they were live benefits and tax free.
But the HMRC adjust you tax free allowance down by the size of you OAP.


Hi, You get tax relief on what you pay in so they can tax you on what you get out. :wink: :roll:

The government abhors a tax free Englishman like nature abhors a vacuum.

Colin


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PostPosted: Tue May 18, 2021 7:03 pm 
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T5 Cartographer
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Joined: Wed Sep 13, 2006 12:44 pm
Posts: 13794
Location: Bristol
Car Models: '59 2.8 XWD '08 Diesel SW
If your pension income is big enough to put you over the taxable income threshold why shouldn't you pay tax on it (given that you didn't pay tax on it at point of earning)? Otherwise it just become a giant tax dodge opportunity for the rich, at the expense of the rest of society.

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PostPosted: Tue May 18, 2021 8:11 pm 
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Auto Sergei
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Joined: Wed May 12, 2004 9:46 pm
Posts: 15464
Location: Mulbarton,Norfolk
Car Models: TTid's only now :-(
colnerov wrote:
wrighar wrote:
Interesting fact (well to me) I learnt a few weeks ago, old age pensions are taxable income. I'd always assumed they were live benefits and tax free.
But the HMRC adjust you tax free allowance down by the size of you OAP.


Hi, You get tax relief on what you pay in so they can tax you on what you get out. :wink: :roll:

The government abhors a tax free Englishman like nature abhors a vacuum.

Colin


I was talking OAP, (not DBP/DCP which does benefit from tax relief)

The OAP you pay for from the tax you pay (NI), and then potentially get taxed on it's return to you (but without NI).

Guessing I was naive in thinking it was like other benefits sans tax.

But that's life :-)

Jules_ht wrote:
If your pension income is big enough to put you over the taxable income threshold why shouldn't you pay tax on it (given that you didn't pay tax on it at point of earning)? Otherwise it just become a giant tax dodge opportunity for the rich, at the expense of the rest of society.


I'll happily pay any tax due on my pension income. It's currently projected to be greater than my actual income, so in 2years 4months I hopefully retire to a 'different' lifestyle.

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PostPosted: Tue May 18, 2021 8:16 pm 
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UKS Addict
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Joined: Sun Jan 27, 2013 10:20 pm
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Car Models: 2004, 9-5 Aero, Noob 3. 200k Milestone.
??.... I was deducted income tax on my gross then had 13% of that deducted from my net income to pay my pension. That deduction ended up being bigger than my mortgage. Hardly the rich benefiting at the expense of the rest of society....

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PostPosted: Tue May 18, 2021 8:56 pm 
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Joined: Wed Sep 13, 2006 12:44 pm
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If that is true you were mis-taxed by your employer. Pension contributions are (or should be) taken before tax. https://www.gov.uk/tax-on-your-private- ... 20pensions

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