Is there a Limit on Number of Pension Tax Free Lump Sums?

L

LiferT

Registered User
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Good Morning All

Perhaps you can assist with a query about the number of tax free lump sums that a person can take on reaching the required retirement age.

If a person has built up a number of small pension pots over a work life in both the UK and Ireland, is there a limit on the number of pension pots that can be cashed in to avail of each pot's 25% tax free lump sum (while keeping within the €200 k limit).

Would drawing down a small pension/tax free lump sum from the UK in anyway compromise the tax free lump sum that could later be taken from an Irish pension (resident in Ireland)?

Thanks in advance

LT
 
jpd said:
The limit is on the lifetime amount that can be drawn down tax-free from all pension arrangements, no matter where they come from
Click to expand...

...and it doesn't matter how many pots there are. If the total of all lump sums doesn't exceed €200,000, they come out tax-free.

As per your post, we're assuming that the 25% method of calculating the lump sum is used. If any of the pots are Occupational Pension Schemes and the person chooses to use one of the two alternative methods of calculation of the lump sum (based on salary and service), then other pension benefits do have an effect on the lump sum calculation. Main reason a person might choose to use one of the alternative methods would be if the calculation gave them a bigger lump sum than 25% of the fund.
 
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