Redundancy lump sum and pension waiver

[Missie]

Hi There,
I have been searching this forum for all previous posts on this issue, but I would be grateful if someone could tell me if my assumptions about my own situation are correct.

I am being made redundant with 6 years service. My pension lump sum option would be 4k (or the equivalent in 30 years time)
If I take this off my redundancy lump sum now, the benefit would be exactly the same, and I would not have to pay tax on an additional 4k of my redundancy.

I am thinking that since my lump sum entitlement is quite small, and there is a lot of talk of the pension tax free lump sum option being abolished it's probably worth taking it now.

Even if the tax free pension lump sum option does still exist, I will still be able to take it on the small pension from my previous employment and any future pensions.

I'm thinking that signing the pension waiver is probably just worth it for larger pensions where the lump sum is more than 10k, or for people nearer to retirement.

If anybody could comment, I'd appreciate it.

M

 

[Deas]

That sounds correct. AFAIK, if you don't plan on taking pension in next 10 years this is the way to go.

 

[Missie]

Thanks for the rply.
I got some additional information this morning though!
Although the current value of the tax free lump sum is about 4k, the actual lump sum in the deferred pension would be almost 20k.

Does that mean that I would be giving up 20k (index linked) to get 4k tax free now?

Now I'm not sure again.

This is such a hard decision to make

M
x

 

[Don_08]

Ok you are not giving up 20k plus indexation at retirement, You are giving up the option to convert part of your pension to a tax free lump sum of 20k plus indexation. The total value of your pension is not affected in anyway by this choice.

 

[Curbaisti]

sorry for dragging up an old thread...I'm in a similar position now

I have more or less all the details

Ex Gratia + Payment in Lieu is approx €75k
The SCSB calculation taking into account the Pension Lump sum value of €27k is greater than the total ex gratia (approx €84k)

the pension I have with my current employer is not the only pension I have, I currently have a personal pension of approx €50k

So my options are as follows:

1. Take the redundacy payment (ex gratia & payment in lieu) tax free + statuatory and dont take the 27k pension lump sum now (approx 99k)
2. Take the redundacy payment (ex gratia & payment in lieu) tax free + statuatory and take the 27k pension lump sum now (approx 126k)

If I was to take the 27k pension LSV now, from reading another thread, this would not affect me taking a tax free lump sum at pensionable age from a new employer pension or from my personal pension? Is this correct?