Can a tax free lump sum portion be taken from the whole pension fund?
Since Pension Simplification from 6 April 2006, all pensions can commute tax free lump sum on the 25.0% of fund value basis for an occupational final salary and money purchase schemes including the protected rights portion. There is an absolute limit to the amount of tax free cash as this is subject to the Lifetime Allowance which is a total fund of £1.5 million in the 2006/07 tax year rising to £1.8 million in the 2010/11 tax year. Currently the limit is £1.65 million for the 2008/09 tax year and the maximum 25.0% tax free lump sum that can be taken at retirement is £412,500 with any amount in excess of this figure attracting a tax charge. The balance of the pension fund must still be used to purchase a pension annuities at retirement. The individual has the option to search for the highest annuity rates using an open market option, however, before making a decision at retirement, learn more about annuities, compare annuity rates and secure a personalised annuity quote offering guaran
