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  1. #1

    Pension & Settlement Agreement

    Hi All,

    I’m just negotiating a settlement agreement that will be around 40k, I will also be taking my local government pension at the same time of leaving.

    I’m aware that he first 30k of my settlement is tax free is there anyway I can pay the 10k into a private pension and then take it out under the 25% of pension rules as tax free.

    My overall pension value is around 200k

  2. #2
    By “settlement” I assume you mean redundancy. You can put the taxed 10K into a pension. But I don’t see where the 25% figure comes from. It certainly doesn’t come from the 30K as the 30K isn’t in the pension. When you take 25%tax free the remaining 75% must be in the same pension.

  3. #3
    According to your previous thread you are too young to draw your LG pension.

  4. #4
    You can pay 10K into a personal pension 'pot', get tax relief on the 10K, and then draw 25% of the value of that pot tax free when you reach age 55.

  5. #5
    OP - are you talking about the tax due from your redundancy payment?

    ie. 40K, of which only the first 30K is tax free, hence tax due would be 2K (normal rate tax payer) or up to 4K (higher rate tax payer).

    I'm not aware of any system that would allow you to put this particular 10K straight into a pensions wrapper in order to avoid the tax. Does anyone else know?


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