Company Pension & TFLS

timrowlands

Hi everyone, long time lurker but first post.

Does anyone know if it is possible to use the SIPP funds to provide part or all of the PCLS from the DB scheme, to save commuting pension?

maximumgardener

timrowlands wrote: »

Hi everyone, long time lurker but first post.

Does anyone know if it is possible to use the SIPP funds to provide part or all of the PCLS from the DB scheme, to save commuting pension?

No. You can't do that
The SIPP is a separate contract from the DB pension.

:beer:The DB contract is worth its weight in Gold and the TFLS should be as well with careful management. You can always spend the TFLS !!!! (if so inclined):beer:
OP does not seem to have that need but may have an urge to buy something. Who knows!

atush

With some DB schemes (like the LGPS in t he past) AVCs could be used to pay the PCLS w/o reducing the DB pension.

greenglide

Does anyone know if it is possible to use the SIPP funds to provide part or all of the PCLS from the DB scheme, to save commuting pension?

If the DB scheme has AVCs the AVCs may be able to fund a PCLS.

My DB scheme works that way and the AVCs are paid by salary sacrifice making it very efficient.

You need to look at the scheme guide or to ask them.

kidmugsy

LXdaddy wrote: »

If you invest the lump sum it will grow at some investment growth rate (G%). The annual pension will increase at some rate related to inflation (I%)

I is almost certainly collared at 0%, and might or might not be capped.

G can be negative, judging by history, for many years in a row.

The big question is "if I take lump sum can I be confident of getting a high enough growth rate to justify the choice, at a level of risk that lets me sleep soundly?". Well, are you, punk?

Trumpeter

kidmugsy wrote: »

The big question is "if I take lump sum can I be confident of getting a high enough growth rate to justify the choice, at a level of risk that lets me sleep soundly?". Well, are you, punk?

I think I've now moved into "Bird in the Hand" mode. Giving up an immediate £47K for £3K a year didn't seem too bad (OK I expected it to reduce when the tax free bit had been used up) but to do it for only £2400 p/a, effectively paying nearly £12K in tax, seems like a long pay back time. I think on balance it will be more useful to have the cash now while I'm still youngish than gamble on an extra 12 quid a week as I approach my 80s.

mgdavid

Trumpeter wrote: »

I think I've now moved into "Bird in the Hand" mode. Giving up an immediate £47K for £3K a year didn't seem too bad (OK I expected it to reduce when the tax free bit had been used up) but to do it for only £2400 p/a, effectively paying nearly £12K in tax, seems like a long pay back time. I think on balance it will be more useful to have the cash now while I'm still youngish than gamble on an extra 12 quid a week as I approach my 80s.

If you're making decisions based on your maths skills then I'm concerned for you; £2400 divided by 52 weeks is £46 (not £12).

atush

So a whole bunch of long time posters said, taking the money isnt a great idea, but you've been convinced by a noob? with just 58 posts?

You'll be investing in guaranteed investment student pods before you know it.

kidmugsy

The payout on the DB pension is so good, and interest rates on loans are currently so low, that I'd consider conjuring up a lump sum by borrowing, and paying back out of the higher pension, and the eventual State Pension. Why not take out a 25 year mortgage?

On the other hand, I might decide that the purpose of the lump sum is just to let me enjoy the capital, in the expectation of a big "pay rise" when the State Pension begins.

But what is probably unwise is to take the lump sum and just use it as savings.

digannio

If I didn't have an over-riding, pressing need for a lump sum and couldn't see one looming up in the near future, then I would take the full £27K p/a index-linked pension like a shot and especially so if I had some other savings in back-up.