You would be far better off rejecting the lump sum and taking the higher income. It does not take account of individual circumstances, particularly if you: Tel: 0800 061 4265 / 077622 13395 Attached new police pensions calculator. They are offered the choice between a set income for life, inflation protected, or a lower income for life and a lump sum now. Use this Commutation Slider Tool to find the perfect balance between income and lump sum. So if you're a basic-rate (20%) taxpayer at the time you come to withdraw the state pension lump sum, you'll be taxed as a basic-rate taxpayer, even if the lump sum you get pushes you into a higher tax bracket. This Commutation Slider Tool is designed for officers in the 1987 scheme with full protection and not subject to the Police Pension reforms. 1.3 The purpose of this note is to provide the tables for commutation of pension to lump sum in the 1987 police pension scheme in England and Wales. endstream endobj startxref 0 The choices you make at retirement will affect your financial situation for the rest of your life. The former officers were awarded a lump sum on their pension after retiring before the age of 55. 1.2 The lump sum is the actuarial equivalent of the commuted portion of pension at the date of retirement, calculated from tables prepared by the Scheme actuary. The state pension lump sum is taxable at the rate you are currently paying. 512 0 obj <>stream Since 6 April 2010, any payment of pension or pension lump sum benefit that is paid to a member of a registered pension scheme (such as the Police Pension Scheme) on If someone offered you a choice between a tax free lump sum of £12,000 now, or an income of £1,000 per year for life, rising each year in line with inflation, which would you choose? You take a lump sum when you retire, and you use it to buy some goodies and a nice holiday? It is intended illustrative purposes only. All Rights Reserved, Financial health checks and one-off reports. h�bbd``b`z$��X�@�� H�4�XS@�� V*�� b�FM+$�$n�d`bd,�)'�3��` ��% Members of public sector schemes (teachers, health workers, firemen, police etc) are particularly at risk of being offered small lump sums in exchange for sacrificing valuable income for life. ?��A�uur�����x��Il��ak`��`�`6�`�h`�`h@���i 0j22�3L�&�x7CLӻ5���~,� `0n? And it is inflation protected too, so it will retain its buying power. April. Going for the lump sum can leave you tens of thousands of pounds worse off over your lifetime, and could leave you struggling to meet your household bills in retirement. maximum proportion of their final salary into a lump sum – this is not taxable, unlike pension income. 1 Police Pension Scheme Protected Pension Age Q and As 1. ]��#��T���x��a���,�-h�b;�3�-��:IG�Cz& �̸�e�����SF,�[�~���7��*+-mF��9�.��G~౸Me�?��Bނ�&�ת2�.����BhW�C w�O���K�N=>y��0�9�d��c\�8�q�tw�9A�Y��8�Y�`�p�W:e���$�3��v��s�Q��"�*�dz�Z�{40���i�~YaT�/#_���[_Č��4�2����x�[�:�E�����Wy�ɍ��W]��>#.$�'5N��?x���M{蟛�,��'���Dx�)�c�����$KN`2����c��t�^�>ӗ�Y�_�S�'$�1�'���C�� �S�Yǽ'7%�[�~�D{-��-��S��{��L�Y��. endstream endobj 483 0 obj <>/Metadata 24 0 R/Pages 480 0 R/StructTreeRoot 50 0 R/Type/Catalog/ViewerPreferences 497 0 R>> endobj 484 0 obj <>/MediaBox[0 0 595.32 841.92]/Parent 480 0 R/Resources<>/Font<>/ProcSet[/PDF/Text/ImageB/ImageC/ImageI]>>/Rotate 0/StructParents 0/Tabs/S/Type/Page>> endobj 485 0 obj <>stream Email: info@wendycochran.com, 2016 © Wendy Cochran Independent Financial Advice. Tough choice? What are authorised and unauthorised payments for tax purposes? New consultee list for police pension scheme regulations. This is exactly the choice that members of defined benefit (or final salary) pension schemes are asked to make when they reach retirement. That’s a nice guaranteed income to have, right? I mean, that’s how pensions work right? Well, many of you will have opted for the £1,000 per year for life. h�b```�*N~�g`f`�s, r&�X_H�Tx��r �. H��V�n�0��?̑, J�VA �Y���@i��8Bl)����)o���-����Ѽ7�3���Ξ�I gg�ɋz�����b��?ޔ;J�Y��Y������^�.�Z���pq9�_��1O��$��A(C�HΤ�R���O����ض�k���϶��=� ��~̂ �s����aZ�c���d�tc[dD�N���_m� Police officers are able to claim their full pension from 55, after 35 years of service, and with an annual pension … Lump sum conversion rate is approx 20:1 so £100,000 lump sum means £5000 less pension per year. endstream endobj 486 0 obj <>stream �Ĩ|f��"��S�R${��{ Q*���2��J�E1��X`D�n�lhE3 ���Fc����:G�n�R���X��h��YR��:K�%K8�������p��X �0�2��Az�)��3й��� Refer to your pension scheme handbook for full details. Wife has approx £70K savings Mortgage will be already paid off. 13 October 2017. The 2006 reforms reduced the generosity of police pensions. What about if the lump sum was £15,000? Going for the lump sum can leave you tens of thousands of pounds worse off over your lifetime, and could leave you struggling to meet your household bills in retirement. • There is an option to exchange (‘commute’) part of the pension for a tax-free lump sum. In the Police Pension Scheme the value of your pension benefits is calculated by multiplying the amount of your annual pension by 16 and adding any lump sum (where you Working out which option is best is NOT straightforward, but the vast majority of people just go for the lump sum. 482 0 obj <> endobj • 30 years’ service is needed for a maximum pension. 496 0 obj <>/Filter/FlateDecode/ID[<8C82232A83D49E4987BD5E016FC47FCE><7749EF98BCDC564F8DDCD7AD75464E0F>]/Index[482 31]/Info 481 0 R/Length 75/Prev 355335/Root 483 0 R/Size 513/Type/XRef/W[1 2 1]>>stream h޼Vmo�0�+��~@>;q^� £24,000 now, or a guaranteed £1,000+ for life ………. �� ����YV�B]�\K��l�S��"�Y���qR���Q �^�]C�緺6��ac�gO�2��pLi���Jר��>�������Ǥ� �ts���D�c����'��}���2��@�C�G\�z�d'˨�l� �I���dӝ �4��i��ntUl����a����M�����{��'��o���ؘ�M6�������&�-g�M�`�1�~����-!�����'����D�FO�S0!�G�UC���H|6�;_�"���!�����Ŭ{"�z��~%$,� VG�j3_NF�C�1'ُ�=Єw���d4�{�� -�n����Χ)�����"����gI�=Jo#��w���p�t�P��B ���)�o$��%hd��i���� ��L` That’s a bit more difficult isn’t it! Or £24,000 ? 8 December 2015. Pension is index linked Wife will be a Basic rate tax payer. Take some time to understand those choices fully, and get advice if you aren’t completely sure which is the best route to take. When you take your Police Pension you will be given the option of being able to take up to 25% of your pension fund as a tax-free lump sum payment, known as commutation. Other info: Prior to the 2016/17 tax year the PIP for the Police Pension Scheme was 1 April to 31 March, except for the year 2015/16 when special transitional rules apply. pension before age 50 and an ill health pension is payable immediately). Ji�J'6&!>���H!A�;��;祡k;:MSj|��=�='׏C̏#&N1S��b'�$*H���c��}& A1�{� �P !��1����L `0�puq�GI�O�a���M �œ��Q1�����{ï����jk�Z3���r��+3g1(�&�,�?��dc��~��7&�>Zʈ�Le֓�8�ےy����������*��'V��z�m�D�o��$ٖy��� lump sum in lieu of pension is compliant with the tax rules as well as with the Regulations. 1A���%H�20Hr�` Z�� �����20�0 ��-j Benefits for others on the death of a police officer • A lump sum death grant of two times pay. • A maximum pension is two-thirds of average pensionable pay. Members of public sector schemes (teachers, health workers, firemen, police etc) are particularly at risk of being offered small lump sums in exchange for sacrificing valuable income for life. %%EOF BUT for schemes which only offer a £12,000 lump sum for each £1,000 of income you give up, this is almost always a really bad idea. %PDF-1.7 %���� may commute a portion of their pension.