Tax free pension contribution of 12.5k or take as cash?

H

housebound

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My employer offered me a mutual separation agreement ( not redundancy). They offered an ex gratia tax free lump sum of 80k and an additional tax free contribution to my pension of 12.5k.

At first they said i could take the 12.5k in cash tax free instead of adding it to my pension thus my total tax free lump sum would have been 92.5k.... however they are now saying that was a mistake and if I wanted to take the 12.5k in cash then it would be subject to tax, prsi and USC.

I have worked there 17 years. My pension is a db pension and will stop once I leave the company. At present the transfer value of the pension is approx 78k and it would pay approx 10.5k per annum at retirement. I am not in a position to transfer the pension as I'm not moving to another employer.

It's a small pension, I am 40 years old so a while yet to retirement age. I'm not sure if it's worth adding the contribution of 12.5k to the pension or just taking it in cash albeit taxed.

I would welcome any advice as I have to sign the legal docs this week.

Thanks
 
There are qualified advisors on this site who can probably discuss specific options. But my unqualified thought is that you probably need to assess how much you "need" an additional €6k cash on top of the lump sum (or €9k depending on tax rate) right now or in the immediate future. €12.5k might not seem a huge absolute figure but it represents a 15% top up on your current pension pot. So you would need a good alternative for the post tax cash - if you had loans you could pay down (or other borrowings) it might make sense.

Otherwise I'd be leaning towards the pension option
 
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