Small DB pension

OldBeanz

The wife is planning to retire at 60 or less, her SP not payable until she is 67 in 2029. She has three DB Pensions, a SIPP and her SP:
1. At present, £5.5k Classic Civil Service pension payable when she is 60 presumably growing at CPI.
2. Her present job has an LGPS pension probably worth about £2k when 67 from which she is paying £1.5k towards an AVC lump sum (just in time thanks to this site). She would draw this at 67.
3. At present, a small Tesco pension which will pay £549pa plus £550 in an AVC. She finished working there this year.
4. SIPP with HL worth £40k. We will be paying in most of her Salary ((Salary-(LGPS contribs+AVC payments)) *.8) this fy.
5. Her state pension is worth £7.5k-ish.

So in today's terms she can build up her SIPP(4) to at least ensure that she maxes out her earnings allowances until she hits 67 when she will be an income tax paying pensioner.

I guess that ensuring she uses all her tax allowance is the target.

Is it worth transferring the Tesco pension now to the SIPP?

The value they have quoted is £549.56 pa but there are 2 parts to it.
Part 1 is £456.85 payable from 65 with RPI up to 5%. Part 2 is £92.71 payable from 66yr and 309 days (reviewed every year so could change in the future (it says)) with CPI up to 5%. I assume you have to claim both together.

They have offered £6829.87. Is this a good deal and would boost her SIPP for use between 60 and 67 or should we just keep this until 2029 which is where it looks as if the pension is heading?

kidmugsy

Looks poor value to me, but someone with a spreadsheet will come along and give you a better guess.

You'd like her to bridge the gap to State Pension age by having income below the personal income tax allowance but as close to it as possible. One obvious way to do this is to drawdown from her SIPP at 60 while she draws her civil service pension. But the inheritance tax rules for SIPPs are so attractive nowadays (but for how long?) that she might like to consider displacing part of the SIPP withdrawal by taking her Tesco or LGPS DB pensions early. She'd have to take the Actuarial Reduction on the chin, but might decide it was worth it to get useful amounts out early and tax-efficiently. An alternative, as you said, is to use the transfer value of the Tesco pension; while she's at it she might establish the transfer value of the LGPS pension too, and consider transferring the two at the same time - if nothing else it should save her a bob or two in IFA fees.

So for each DB scheme (bar the civil service one) it could be one of (i) Leave be, (ii) Draw early, or (iii) Transfer.

atush

I agree, I would start using the Sipp from age 60, as it will mean less tax paid, and I would consider keeping up contribs from age 60 of 2880/3600 PA.