Case for transferring DB -> SIPP?

RebTech

I've 20 months to go to state pension age. In two months a small DB pension becomes payable, £4.5k lump sum and £125/mth (currently awaiting a transfer value). There's also £10k in an AVC.

Unfortunately I'm currently living on means tested benefits and that's likely to remain the case for some time. I'm getting a new knee in a couple of months and recovery should be in the region of 2-4 months, then I'll have to start looking for a job. Meanwhile the pension will be clawed back from the benefits, £ for £.

To avoid that I'm thinking about transferring both main scheme benefits and AVC into my existing SIPP, which I currently plan to draw down via UFPLS as and when required.

I know that professional advice would be required, and I know it will not be cheap because such a move is not generally recommended. But does it make sense, everything considered, in this situation?

Keep_pedalling

Quite rightly your cunning plan won't work as the money you transfer will be regarded as savings, so you will still lose your MTBs.

RebTech

I get the moral dimension, and after more thought it's quite possible that would stop me doing it. I'm only looking for information so I know clearly what the options are.

My impression is that pension funds don't count as savings for MTB purposes.

PensionTech

the money you transfer will be regarded as savings

I don't think it would. Do you have a source for that?

But does it make sense, everything considered, in this situation?

We're talking 6 months of income here. I don't think that is a significant enough factor to tip the balance in favour of transferring if other circumstances (target income, attitude to risk etc) make it a bad idea. And it will almost certainly be outweighed by the cost of advice.

Is it possible to take late retirement?

RebTech

Thanks PensionTech.

Because I haven't been employed since 2000 (was self-employed before the knee packed in), as well as my age, I'm not optimistic about getting a job quickly, and I don't believe my business will be resurrectable, so we're looking at somewhere between 4-18 months of income.

I did ask about deferring and was told that I would not get arrears back to the due date, which at the time I took to mean there'd be no point in doing so, but I can see that might have been a mistake.

I've just had a quote of £750 for advice.

Keep_pedalling

In transferring the pension simply to maintain a qualification for means tested benefits, the OP would fall foul of the deprivation rule.

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/417473/pension-flexibilities-dwp-benefits.pdf

MyOnlyPost

Keep_pedalling wrote: »

In transferring the pension simply to maintain a qualification for means tested benefits, the OP would fall foul of the deprivation rule.

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/417473/pension-flexibilities-dwp-benefits.pdf

Reading that the deprivation rule seems a little ambiguous:

If you spend, transfer or give away any money that you take from your pension pot

Transferring from one product to another is not taking money from the pension pot, so what the transfer in the statement relates to may not be transferring the pension but transferring to a spouse or dependant after receiving it from the pension

RebTech

Keep_pedalling wrote: »

In transferring the pension simply to maintain a qualification for means tested benefits, the OP would fall foul of the deprivation rule.

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/417473/pension-flexibilities-dwp-benefits.pdf

It looks to me as if "pension pot" there could be interpreted as the totality of an individual's pension pots, in which case a transfer between them, as opposed to transferring funds out of pensions altogether, would not signify.

Edit: MyOnlyPost, our posts crossed, glad we see it the same way though.

Keep_pedalling

MyOnlyPost wrote: »

Reading that the deprivation rule seems a little ambiguous:

If you spend, transfer or give away any money that you take from your pension pot

Transferring from one product to another is not taking money from the pension pot, so what the transfer in the statement relates to may not be transferring the pension but transferring to a spouse or dependant after receiving it from the pension

I agree it is a bit ambiguous, however I doubt a transfer for the sole reason of avoiding loosing benefits is going to go without challenge, and you risk putting yourself in a worse position than sticking with you current pension arrangements.