(please note: this section is not relevant to you if your fund is held within a personal pension).

If you are a member of a final salary pension scheme and you are reaching the age at which you wish to start drawing benefits – whether or not this is before the normal retirement age of the scheme – read on!

Even if you are still working for the company and still an active member of the company pension scheme we will often be able to help.

Briefly, when starting to draw benefits from a personal pension the maximum amount that can be taken as a tax free lump sum is, very simply, 25% of the fund.

In contrast, the maximum amount of tax free cash which may be taken from an occupational pension arrangement is calculated according to a (sometimes complicated) formula linked to the scheme member’s pensionable earnings (broadly, taxable salary) at the date of leaving the scheme. For some people, applying this formula means that they are able to take all of their pension fund as a tax free lump sum, but this doesn’t happen very often. Most often, the formula leads to a maximum tax free cash figure between 10% and 20% of the individual’s fund.

If you are have accumulated benefits in a final salary pension scheme (one type of occupational pension scheme) – whether with a previous employer or your current employer – the maximum tax free cash will typically be limited towards the lower of those figures.

So, if someone in an occupational pension scheme has a tax free cash entitlement lower than 25% of the value of his benefits a transfer to a personal pension arrangement may be an attractive option if the maximum amount of tax free cash is required.

Although the calculations can look daunting, it is relatively easy for The Pensions Office to produce a straightforward comparison between ‘stay put’ in an occupational pension scheme or transfer to a personal pension.

If you would like a free assessment of your options, including a comparison of tax free cash……