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LTA calculations when someone has both DC and DB pensions

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  • stoozie1
    stoozie1 Posts: 656 Forumite
    Thanks Malthusian.

    I meant crystallization at 55 while pension is lower than a million, and whilst still an active DB member.

    That's ok right?
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  • Malthusian
    Malthusian Posts: 11,055 Forumite
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    Depends exactly what you mean by OK. He can make as many contributions as he wants but there is usually little point in making a pension contribution if at some point down the line you will be increasing the amount that will eventually be hit by a lifetime allowance charge.

    Being an active member of a defined benefit scheme can be one of the exceptions, because the benefits you get from your contributions are often good value for money even if you have to deduct a lifetime allowance charge.
  • jamesd
    jamesd Posts: 26,103 Forumite
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    A person with a million already can usefully still crystallise at 55, notably crystallising during a market downturn. Even if the LTA is triggered, the 25% plus income tax cost can be less than the income tax and NI relief obtained on the way in, particularly if VCT buying is used to reduce the income tax bill on the way out.

    But at this sort of level it may make more sense to initially do VCT buying than pension contributions. Depends on the initial tax and NI relief and employer contribution levels as well as the income tax rate and tax mitigation used on the way out. But staying in the DB scheme and mitigating income tax on the way out is likely to be a good move anyway.
  • stoozie1
    stoozie1 Posts: 656 Forumite
    EdSwippet wrote: »
    Amplifying Malthusian's response a little...

    Mr A will use 80% of the £1mm LTA when he starts his DB pension at age 60. This leaves him 20% to use against the DC pension in his SIPP.

    thank you.

    I am a bit confused about which BCE a deferred pension comes into if the date of it's deferral is the commencement of another part of a DB scheme.

    Worked illustration:

    At 60 member has a pension due of £10k annual, £30k TFLS

    This event stops him contributing to and deferring a pension payable at SPA.

    The deferred pension then, is it's value calculated at 60, or at SPA?
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  • EdSwippet
    EdSwippet Posts: 1,663 Forumite
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    stoozie1 wrote: »
    I am a bit confused about which BCE a deferred pension comes into if the date of it's deferral is the commencement of another part of a DB scheme.
    Sorry, no idea. I have no defined benefits pensions, so don't swim in those waters. In my response here I was just working off your "... LTA value of £800,000" statement in the original post.

    Any other takers?
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