Trivial Pensions

The current http://pension-tracing-service-uk.co.uk/ United kingdom pension policies lets you to definitely have a lump sum free of tax from a pension pot if you pick to get retirement gains. The most tax absolutely free lump sum obtainable is 25% in the fund worth.

The 25% rule relates to most described contribution pension strategies - stakeholder, individual pensions equally specific and team. The utmost allowable concerning closing wage (defined advantage) may perhaps change as well as the lump sum payment will rely upon the plan principles.

Should your pension pot is compact you may have the option to go ahead and take entire fund as being a lump sum. To take your pension less than the trivial regulations you should meet up with a variety of situations:

one. You have not been paid out a trivial commutation lump beforehand from any registered pension scheme. 2. On the day you chose to commute your pension legal rights they do not exceed 1% of your lifetime time allowance. 3. The lump sum have to be paid out from your age of sixty and no afterwards than 75.

The 1% rule is critical - Your whole pension legal rights (the worth of your respective pensions) should be no better as opposed to lifetime time allowance from the year you commute benefits. For 2010/11 & 2011/12 the lifetime time allowance is £1.8 million so your positive aspects have to be valued at no more than £18,000.

For example you could have two pensions valued at £18,000 and £14,000 - Both equally below the 1% lifetime time allowance - However it is the combined price - All your pensions have to be valued at £18,000 or less. If for any reason you do receive a lump sum payment that does not satisfy the policies you will be subject to a 40% tax charge, the plan could also be subject to a further tax charge. If you meet the criteria you and wish to acquire more than one pension fund you should do so within 12 months. If you fail to do this you will not be able to cash in a further pensions less than the trivial pension policies. As with any pension lump sum 25% is paid out free of tax, however the remaining 75% will count as taxable income during the 12 months you receive it.

Applying for Trivial Pensions:

So, if you may have reached 60 you need to calculate any pensions not in payment. If the complete price does not exceed £18,000 then chances are you'll be able to a take the whole pension as a lump sum. If you may have a pension paying rewards you will need to take these into consideration as well. You should get advice and ensure your calculations are correct before looking at using the trivial pension regulations to take benefits as being a lump sum.

I'm a regulated IFA with over ten years experience in advising clients on their retirement planning - Do you need pension advice? I specialize in: SERPS / S2P Pensions, SSAS Pensions and Pension Transfers.

I work on a fee basis and offer a no cost initial meeting anywhere in England and Wales. You can arrange the meeting at your home or place of work.

For more information on SERPS / S2P - Please visit my dedicated SERPS Pensions Blog

Alternatively please visit www.ssaspension.co.british isles for information on SSAS Pensions and how you can use them to fund your business growth