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General Discussion Area / Re: Small Pot Pensions....
« on: 22 July 2025, 20:29:17 »reading between the lines a bit here but i am guessing these are defined benefit pensions and the scheme is in the process of winding up and transferring to an insurer. that is what Rothesay life are.
if that is right then i expect the lump sum offered is known as a winding up lump sum and as you have commenced your pension, taxed as income. The offer letter you have received should say this somewhere.
It seems like you are being taxed at 45% on the £80 per month pension. You'll have to check if that is right but if it isnt you may need to sort it with HMRC, possibly completing a tax return.
also building on LC0112G's comment about 8.85 years, don't forget the contingent spouse's pension which will be extinguished by a winding up lump sum. its the only time it happens, normally commutation of pension for lump sum only impacts yours and not your spouse's.
The main reason for this being offered in winding up scenario is that the operating cost of paying a small pension is material vs the pension ( payroll/admin etc) cleaning up small pots makes admin simpler.
hope this helps
