# pension



## powerplus (Oct 6, 2014)

hi need a bit of advice

my wife is being made redundant through health 
havent had the paper work through yet but has been told she will get a 22k lump sum and a annual pension

her previous statements suggest tax free lump sums 
so i am assuming this lump sum is not taxed

we dont have any other income and are under retirement age 

just savings
so would tax free sound right

panicking a bit as off to portugal wednesday for 3 months

barry


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## rayc (Jun 3, 2008)

> powerplus said:
> 
> 
> > hi need a bit of advice
> ...


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## PaulW2 (May 30, 2010)

Whether the lump sum is taxed will depend on whether it is an amount that she has contractual entitlement to (e.g contractual notice pay, leave pay etc.) If it is 'real' redundancy pay rather than a payment due in terms of her employment contract it should be tax free.


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## aldra (Jul 2, 2009)

Barry

It might depend where your wife works

Is she being made redundant or retiring on grounds of ill health?.

If retiring a certain amount of pension can be taken cash and tax free

Often you can take more in cash and less in monthly pension payments

The advantage is its tax free

The disadvantage is it reduces your future monthly income from your pension

If you have a safety net then take as much as you can tax free

But I think you need a safety net which works both ways
For example I took maximum tax free money
But my pension is reduced

But I am not dependant on my work pension even if Albert is no longer with me
His pension is higher, his tax free cash was less
Just think it through

Aldra


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## pomme1 (May 19, 2005)

Barry,

I think you may be confusing two situations here. You can't be made redundant on health grounds, but you can be given early retirement. As others have said, if it's early retirement and she is a member of the pension scheme, she should have a contractual entitlement to a regular income and a cash lump sum. The latter will be tax free.
If it's genuinely redundancy, the first £30k is tax free, the balance is taxable.
Hope this helps

Roger


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## powerplus (Oct 6, 2014)

hi guys

sorry early retirement on health grounds (28 years at tesco )

they have upped here pension by 25% because of the early retirement

im the same but from a different employer and have 2 different pension pots totaling about £20k so assume i can draw this as early retirement on health grounds

thanks for the advice

barry


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## nicholsong (May 26, 2009)

New rules are about to come in in April about withdrawls from defined contribution pension scemes(not for defined benefit schemes, which the Tesco one probably is?)

For your own pension you should make tourself familiar with these rules or get professional advice, both for the rules and the tax treatment of what you draw out from the pension fund - the tax aspect is quite complex.

Geoff


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