Cash Allowance

Previous tax rules meant that calculating your tax free cash on retirement was complicated but the position from 6th April 2006 is much simpler.

From 6th April 2006 you will be able to take 25% of the value of your Retirement Account as tax free cash at the date you retire subject to a government imposed upper limit being 25% of the Lifetime Allowance, so a maximum in 2006/7 of £375,000.

In some cases, this may mean you will be able to take more tax-free cash at retirement than you could under the current Rules. In other cases you may be able to take more tax free cash under the pre 6th April 2006 rules and O2 has put in place a rule within the Plan to ensure, if the tax free cash you were entitled to immediately before 6th April 2006 was higher, that you may take that if you prefer.

You should note that if you transfer your benefits from O2 to another pension arrangement the tax law does not allow you to take the entitlement to the pre 6th April 2006 tax free cash with you; your tax free cash will be based purely on the 25% rule.

More details on tax free cash can be found under Retirement