For many retirement savers, the tax-free lump sum available from the age of 55 years old is the main attraction of a pension.
That major cash boost is set as a payment of 25% of a pension fund.
For direct contribution pensions, such as a self-invested personal pension (SIPP) or personal scheme, the money is set as 25% of the fund value.For direct benefit or final salary pensions, the lump sum is calculated as 25% of the value of the first year’s payments times 20.So, for a £20,000 a year annual pension, that’s £20,000 x 20 = £400,000 x 25%, which […]
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