Lump Sum Redundancy Payments

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imme

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IT21 - says that you can increase your exemption if you "irrevocably give up your right to receive a lump sum from the pension scheme" - what does this really mean....
To me is seems like something weird to give up - am I missing something
 
Some pensions offer a lump sum on the retirement age with a certain amount pw after that as a pension. You will not be able to take the lump sum on retirement if you take this option. It means (afaik) that you cannot take a lump sum at retirement age or else you will be taxed on it.
 
It means (afaik) that you cannot take a lump sum at retirement age or else you will be taxed on it.
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Not even the usual 25% tax free lump sum option that is normally available? Or does this restriction apply to some other forms of lump sum payments that are normally tax free? If the former then it's a fairly significant right to give up!
 
Stupid to give up lump sum at retirement????

given that my pension does allow for a lump sum at retirement (currently valued at 8,500) and I am almost 40 - would I be stupid to give up the right for the lump sum at retirement (I think I would - but not sure if I am missing something)
Did not understand the last comment about 25% lump sum. Is this something I would get anyway !!! (never read about this - but then again have not read alot on pensions) - I thought that the calculation was 3/80 of earnings for each year of service - and I think that is what I would be giving up.
 
Re: Stupid to give up lump sum at retirement????

Not even the usual 25% tax free lump sum option that is normally available?
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I'm not sure whether this or the 3/80 calculation is the one but I presume this lump sum can vary between schemes but that's the sum I'm on about. The only thing is that you waiver the right to this tax free only on your current pension scheme. If you go to another company and hence enter or transfer to their scheme the tax free amount will be pro rata. So in your situation you would probably get half of the lump sum tax free assuming you work for another 20 years. I'm also assuming you have been paying into the same pension for the last 20 years.
As regards giving up the LS for the sake of €10k tax free I would not in your shoes as it will only save you around €2 k now but may cost a bit more later. I'm not a pension expert however so grain of salt and all that.
Hope this makes some sense
 
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