# What are effects of Redundancy lump sum on Tax free lump sum from DB Pension scheme



## rheinie (18 Feb 2008)

We have a Redundancy situation at work .People are been offered Voluntary Redundancy.Company will not offer Deferred Pensions.I am 5 years short of NRAge.If I were to opt for this Redundancy what would be the effects of this Lump sum on the Tax Free Lump sum from a Defined Benefit Pension scheme in 5 years time.I have 41 years service so have max 40/60th of final salary.


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## Homer (19 Feb 2008)

*Re: What are effects of Redundancy lump sum on Tax free lump sum from DB Pension sche*

Hi Rheinie

Details of how severance payments are taxed and how they interact with pension lump sums are set out in the following Revenue leaflet:

[broken link removed]

In general, the amount of severance payment you receive will not have any impact on the lump sum you can receive from your pension scheme, _unless_ you decide to waive your entitlement to a pension lump sum in order to pay less tax on your severance payment (and the rules of your pension scheme permit such a waiver).

Whether or not this would be worthwhile will depend on your individual circumstances and you should seek advice from a tax expert.  In redundancy situations, companies will often pay for the provision of this advice and you should ask your employer whether such advice is available to you.

Regards
Homer


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