How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask Rakhi Vasavada Your Own Question

Rakhi Vasavada
Rakhi Vasavada, Financial Advisor
Category: Scots Law
Satisfied Customers: 4449
Experience:  Attorney and Financial Expert. Have specialization in Financial Laws.Practice experience of over 13 years
Type Your Scots Law Question Here...
Rakhi Vasavada is online now

Is it advisable to accept a lump sum to replace a pension given

Customer Question

Is it advisable to accept a lump sum to replace a pension given by b
Submitted: 1 year ago.
Category: Scots Law
Expert:  Rakhi Vasavada replied 1 year ago.
Dear Friend,

Hello and welcome. Thank you for providing an opportunity to assist you.

Generally it is advisable to take a lump sum as against pension but a lot more depend upon your personal circumstances.

Let me try and explain how should you take this decision based on your personal circumstances.

You can take a cash lump sum when you start to take an income from your pension. In general the lump sum is free of tax, so most people take the maximum allowed by HM Revenue & Customs. But you should consider carefully what makes most sense in your circumstances.

One major advantage of taking a cash lump sum is that you don’t need to pay any tax on it, up to a maximum of a quarter of your pension pot’s value.

You lose this tax advantage if you leave the money in your pension and convert it into a retirement income – for example, by buying an annuity.

Further, You need to consider the impact of taking a lump sum on your likely income in retirement. If you take a quarter of your pension pot up front, that leaves less money with which to buy yourself a retirement income product such as an annuity.

For example, a pension pot of £100,000 currently buys a fixed annuity worth around £500 a month. But if a quarter of the pot is removed as a lump sum, that monthly figure falls to £375.

However, even if an income drop like this would cause you difficulties, it still makes sense to take your full tax-free cash lump sum. You can then use it to buy a source of income such as a purchased life annuity, etc.

THE MOST IMPORTANT is that what you intend to do with your lump sum, if taken. If you are using that to reduce your debt, mortgage, and thereby save substantial interest savings, etc, then it is worth it. To sum up, it is IMPORTANT that it is not used up in unproductive places.

So, if you are fine with taking a tax advantage of lump sum being tax free money, if you DO NOT have any problems with your retirement income being lowered at later stage of your life OR if you have good productive use of your money than YES.. You can certainly go ahead taking the lump sum as against pension.

I am sure this would help.

You may please leave a positive rating if this helps as this is the only way we are compensated for assisting you. Alternatively, you may revert back with a reply if you need further assistance or if I have missed out on any aspect of your question,

Warm Regards

What Customers are Saying:

  • Thank you so much for your help. Your answers were really useful and came back so quickly. Great! Maggie
< Previous | Next >
  • Thank you so much for your help. Your answers were really useful and came back so quickly. Great! Maggie
  • A quick response, a succinct and helpful answer in simple English. I believe I can now confront the counter party with confidence -- worth the 30 bucks! Rick
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C.
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex
  • Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult. GP
  • I couldn't be more satisfied! This is the site I will always come to when I need a second opinion. Justin
  • Just let me say that this encounter has been entirely professional and most helpful. I liked that I could ask additional questions and get answered in a very short turn around. Esther

Meet The Experts:

  • Ben Jones

    Ben Jones

    UK Lawyer

    Satisfied Customers:

    Qualified Solicitor - Please start your question with 'For Ben Jones'
< Last | Next >
  • Ben Jones's Avatar

    Ben Jones

    UK Lawyer

    Satisfied Customers:

    Qualified Solicitor - Please start your question with 'For Ben Jones'
  • Anna's Avatar


    Teacher, writer, biologist

    Satisfied Customers:

    Great research skills, variety of work experiences, teaching experience.
  • pdheslin's Avatar



    Satisfied Customers:

    20+ years of internet site creation and search engine optimization. Dozens of search tools at my disposal.
  • Kim D.'s Avatar

    Kim D.


    Satisfied Customers:

    Researcher 20+yrs in small and large institutions
  • findinganswers's Avatar


    Internet Researcher

    Satisfied Customers:

    Internet Researcher, Nurse for over 17 years, and can find answers for you!
  • ProMBA's Avatar


    Internet Researcher

    Satisfied Customers:

    I'm an owner of three businesses, with both undergraduate and graduate business degrees from top tier universities.