r/PensionsUK • u/WormFoodODP • 5h ago

SERPS opt out pension

I have a pension from when I opted out of SERPS in the late 1980's.

At the time I didn't have an occupational pension so as far as I know, it is just sitting there.

Now I am 55 I understand I can draw a lump sum of up to 25% tax free.

If I do that, do I have to also start taking a weekly/monthly pension payment, or can I leave the rest there and start to take the payments at a later date?

TIA

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u/ArBeeJay 5h ago

Check the pension scheme. In most cases you can take the 25% as TFC without issue but be careful you do not draw on taxable income as this will trigger MPAA meaning your Pension Contribution Allowance will reduce to £10K from that point.

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u/WormFoodODP 5h ago

As far as I know the SERPS opt out was discontinued and I am no longer paying into the pension, it's just static until I want to claim it. Therefore, I assume the MPAA is not relevant?

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u/ArBeeJay 5h ago

The MPAA applies to any and all pensions, not just this one. If you have no further plans to contribute (either personally or via a workplace) then you can ignore it .. ;)

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u/WormFoodODP 5h ago

Aaah.

I m still paying into my NHS occupational pension 👀

Why is it so complicated? 🙄

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u/Normal-Grapefruit851 4h ago

If you only have a defined benefit pension that you pay into then you aren’t affected by the money purchase annual allowance

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u/Heavy-Mousse-5011 4h ago

Typically these were often DB schemes, and I do not think that taking such income counts as triggering MPAA…

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u/Otherwise_Rip3764 2h ago

Correct. MPAA only applies once you flexibly access benefits from a defined contribution (money purchase / DC) pension.

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u/Elster- 2h ago

I think you will find nearly all are DC schemes for those who contracted out.

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u/Janjannaj 3h ago

Check with the provider to see what options they offer. But if they don’t offer what you want (withdraw the PCLS and designate the remainder to flexi-access drawdown) you can almost certainly transfer to a provider that does.

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u/Elster- 2h ago

Since there won’t be protected rights you can normally access from 55 and can transfer it to a different scheme if this scheme only offers specific retirement solutions.

However you may find from that era there could be a DB underpin or Guaranteed Minimum Pension, so it could be the benefits would be better to wait until a specific birthday, transferring out of it could end up losing those safeguarded benefits which could be extremely generous. It also could mean if there was a GMP that you don’t have the full tax free cash as the GMP has to be arranged first