Is it possible to take my pension as a lump sum?

12 February 2013

Q

I have a small pension that was due to be taken on my 65th birthday on 26 January 2013. The pension was one I paid into when I was self-employed about 30 years ago. I am currently in receipt of a company pension of just over £10,000 per year, and another very small pension that pays about £100 annually.The small pension that can now be paid has a total value of £1,183.33 at present. Can I take this as a trivial lump sum in full, or do I have to buy the very poor value annuity offered by the pension company? I would have to live to be 104 to recoup the full fund value.
From
DE, Plymouth

A

Good news. Yes, you can. Thanks to a rule change on 6 April 2012, individuals over 60 are allowed to take both occupational and personal pensions as cash provided the fund does not exceed £2,000 and they won't get any other benefits from the pension once the cash is taken.

One-quarter of the payment is taxfree, but the rest will be treated as taxable income. However, it's worth noting the rules only allow this facility to be used twice in a lifetime.