trivial pensions

[john1956]

hi,

I have an existing pension of €13,500 per year and I also have a separate personal pension pot of c€25,000 which I can take 25% tax free.

Just wondering, if in taking the tax free lump, reducing remaining balancing on fund below €20,000, can I cash it in under trivial pension rules? Or does the fact, I have an existing pension negate this option?

regards

John

 

[Steven Barrett]

A few things:

The trivial pension has been increased from €20,000 to €30,000.

As you have a pension of €13,500, you can take 25% tax free lump sum from the other one and take the remainder as taxed cash. It is taxed under PAYE. No need for trivial pension rules in this case (you wouldn't be able to avail of it because of your existing pension benefits).


Steven
www.bluewaterfp.ie

 

[Funnyname]

Re cashing in a trivial pension pot, is it tax free or will other income affect the way it is treated by revenue?

 

[Steven Barrett]

It's never tax free but the tax rate is dependent on which route you take (there's two).

if you have a trivial pension of €330 per annum or less from an employer scheme, before tax free lump sum is deducted, you pay tax of 10% tax. You have to wait until the normal retirement age of the scheme, you can't access it early.

If you have a pension pot less than €30,000 after the tax free lump sum, the remainder is paid as a taxed lump sum subject to PAYE in the year it is paid.


Steven
www.bluewaterfp.ie

 

[Funnyname]

It's never tax free but the tax rate is dependent on which route you take (there's two).

if you have a trivial pension of €330 per annum or less from an employer scheme, before tax free lump sum is deducted, you pay tax of 10% tax. You have to wait until the normal retirement age of the scheme, you can't access it early.

If you have a pension pot less than €30,000 after the tax free lump sum, the remainder is paid as a taxed lump sum subject to PAYE in the year it is paid.


Steven
www.bluewaterfp.ie

Can the trivial pension ( <30k at the moment ) be cashed in between ages 50 and 65 nra?