We will assume you are ok with this, but you can opt-out if you wish.
In most cases you should complete one of the two forms provided to you;
If you want to take the lump sum you should complete a cash lump sum form or
If you want to keep your pension you should complete a pension continuation form.
You will need to complete the requested details on the form of your chosen option and if you are not currently in regular receipt of a pension you may be asked to provide a current bank account (in your name or as part of a joint account) to pay the cash lump sum into.
We may well have received your option form and it is with our claims processing team. If you have not had a response within 8 weeks please contact us.
As long as the option period has not ended, then yes. Please contact us and we will talk you through the process.
If the option period has ended we will be unable to change your option. If you are now interested in exchanging your pension for a cash lump sum, you will need to contact the pension administration team who will be able to provide you with more information. Please note that the cash lump sum is likely to be recalculated and may go up or down.
If you take the lump sum and then change your mind, you can’t get your pension back.
There can be multiple payment dates for schemes we are working on. The information should be held in your letter.
Can you help me with Tax issues?
We are not authorised to provide any tax advice regarding your lump sum. Tax is based on each individual’s circumstances depending on your tax code, your annual income and other earnings factors; therefore we cannot accurately calculate tax.
How much tax I have to pay?
If you are already in receipt of your pension, the entire cash lump sum is taxable. For many people, the amount of tax deducted by the pension scheme will be the correct amount and there will be no more tax to pay.
If you are a deferred member, having not yet taken your pension, 25% of the cash lump sum available to you will be tax free. The remaining 75% of the lump sum will be taxed at the basic rate of 20%. However, depending on your current tax code, your annual income and other earnings factors, receiving the lump sum may push you into a higher tax bracket.
Can I split the payment or get it paid later?
For all members the payment must be made in full as a single payment and therefore cannot be split over more than one tax year or paid on an alternative date other than that quoted in the letter.
Additional tax help
For additional information on how much tax you may be paying, you may wish to contact Tax Help for Older People, a charity set up to provide tax advice for lower incomes. Their number is 01308 488 066.
I think I have paid too much tax?
If, after payment, you think you have paid too much tax you can ask HM Revenue & Customs for a tax refund now; you do not have to wait until the end of the tax year. You can call the HM Revenue & Customs Helpline on 0300 200 3300 and ask for a P53 Form. This is also available online. You will require your P45 to complete the P53, which the payroll department for the scheme should supply to you after payment of the cash lump sum has been made. This can take up to 4 weeks to receive.
Unfortunately, our calculations for your pension benefits have come to over £30,000 and the Trustees are therefore unable to offer you the cash lump sum.
As your pension benefits within the Scheme have been valued to between £10,000 and £30,000, we are required by government legislation to take into account all other benefits of which you are in receipt of, excluding state benefits or dependants pensions received on behalf of a deceased spouse. We issued an “Other Benefits” form to you to provide us with this information and on receiving this form back; we have used the information provided to calculate your eligibility. This involves reviewing any cash lump sums received and valuing any defined benefit pensions provided. To value your pensions, we must apply factors provided by the government to all annual pensions provided. We must then add together the values of these pensions, including the scheme pension (which we initially write to you about), and it is the combined total value which must come to under £30,000 in order for you to be eligible to take the cash lump sum. As you have been calculated as ineligible, the Trustees of the Scheme are unable by law to offer you this cash lump sum.
A frequently asked questions fact sheet will have been supplied with your correspondence answering all questions on Retained Benefits. If you have not received one or, if you have read it and still have further queries, please do not hesitate to contact us.
This depends on how benefits are set up in your scheme. Your current pension scheme administrator will be able to confirm this for you. Should you choose to take the lump sum your spouse would receive no pension in the event of your death.
No – payment of the lump sum means the pension scheme will not pay you or your family any benefits in the future.
The actuaries for the Scheme have valued your pension based on the current amount being paid to you and any future pension payments. These calculations take into account life expectancy, mortality rates, market factors and includes an estimate for future increases which would be applied to your pension. If you decided to take the cash lump sum offer at another time, then the value may go up or down depending on the variables included in the calculations.
The cash lump sum which has been offered to you is valid for payment date stated in your letter and cannot be changed. If you choose not to take the cash lump sum at this time, you can contact the Scheme administrators in the future. Please be aware that your ability to do this will depend on government legislation at the time of your request, and the lump sum will be subject to recalculation. The cash lump sum may be higher or lower depending on your age, life expectancy, mortality rates and market factors at that time.
This will depend on whether or not the people who manage your pension scheme (the Trustees) allow it. There can be no certainty that they will allow you to change your mind in the future.
It is possible that accepting the cash lump sum could impact on the state benefits you receive. This will depend on the exact benefits being received and from whom. In order to find out any possible impact, we would suggest that you contact whichever Government department the benefits are paid by, in order to find out more. You should be able to find their details on any letters which you may have received from them or online.
It is an option introduced by the Government which, in our experience, is attractive to many people – the Trustees therefore wanted to make you aware of this option.
We are not able to offer you any advice. If you are at all unsure as to the best course of action, you may wish to ask an Independent Financial Adviser to help you. You can find an IFA by going to the following website www.unbiased.co.uk/find-an-adviser. Alternatively, you may wish to speak to your local Citizens Advice Bureau.
A timeline will have been agreed with the Trustees of the Scheme to give enough time for all members to consider their options and respond accordingly. The payment date is usually the same for all members.
If you choose not to take the cash lump sum at this time, you can contact the administration department for the Scheme in the future to request a Trivial Commutation. Please be aware that your ability to do this will depend on government legislation at the time of your request, and the lump sum will be subject to recalculation. The cash lump sum may be higher or lower depending on your age, life expectancy, mortality rates and market factors at that time.
If you are a Pensioner or dependent the cash lump sum will be paid into the same bank account that you currently receive your pension payments. If you are a deferred member and decide to take the cash lump sum you must provide us with the details of which bank account you wish the payment to be made. The account will need to be held in your own name, or as part of a joint account.
The payroll department for the Scheme should supply you with a P45 after payment of the cash lump sum has been made. This can take up to 4 weeks to receive, if you have still not received your P45 after this time, please contact us and we can query this with the payroll provider.
If you choose to retain your pension within the scheme there will be no change to the frequency of payments unless stated by the administration team.
In order to alter your payment frequency you will need to contact the administrators of the scheme. Would you like those details?
Exchanging your pension for a cash lump sum is an option introduced by the Government, not by the pensions industry. The Government made it available to more people in early 2014 when it increased the size of the cash lump sum that could be paid to members.
In most cases no, however the letter you receive from your scheme should make clear the choices you have.
You do not need to advice but if you are unsure as to the best course of action, you may wish to talk to an Independent Financial Adviser (IFA). You can find an IFA by going to the following website www.unbiased.co.uk/find-an-adviser. The costs of an IFA vary significantly – they will tell you what their advice will cost when you appoint them.
It will continue to be paid in exactly the same way as it is currently paid. Nothing will change if you do not take the lump sum.
The lump sum detailed in the letters is just in respect of your pension benefits in the Scheme. If you are interested in taking a cash lump sum from any other pension scheme, you should contact the administrator of that pension scheme.
If any of the information you provide to us is unclear we would like to be able to contact you to check our understanding of the information. Your information will not be shared with any third party and will not be used for sending you marketing information.
We work for the Trustees of your pension scheme. They have asked us to speak with you and let you know about the option to exchange your pension for a cash lump sum. We work for hundreds of pension schemes across the country.
Click HERE to submit a question to our team.