all the money built up in your pension as cash – up to 25% is tax-free. smaller cash sums from your pension – up to 25% of each sum is tax-free.
What is an additional lump sum payment?
A lump-sum payment is an often large sum that is paid in one single payment instead of broken up into installments. Lump-sum payments are also used to describe a bulk payment to acquire a group of items, such as a company paying one sum for the inventory of another business.
Why do you get a lump sum pension when you retire?
Pension lump-sum payouts and your retirement security A guide for consumers considering their retirement payout options from a private-sector plan Your traditional pension plan is designed to provide you with a steady stream of income once you retire. That’s why your pension benefits are normally paid in the form of lifetime monthly payments.
What is the tax treatment of a retirement lump sum?
Retirement Lump sum benefits rates for 2013. As from 1 October 2007, the taxable portion of a lump sum from a pension, provident or retirement annuity fund on retirement or death is the lump sum less any contributions that have not been allowed as a tax deduction plus the taxable portion of all lump sums previously received.
When do lump sum benefits have to be aggregated?
Lump sum benefits must be aggregated – from 1 October 2007 in respect of retirement fund lump sum benefits, and from 1 March 2009 in respect of retirement fund lump sum withdrawal benefits. Once all lump sum benefits are aggregated, the tax due is calculated in accordance with the respective tables below.
What happens if you take a lump sum payout?
If you choose a lump-sum payout instead of monthly payments, the responsibility for managing the money shifts from your employer to you. In addition, you increase the risk of outliving your money, and losing your money due to bad investment advice, fraud, or poor stock market performance.
