Postponing DC lump sum

Vendee

If I take the maximum tax free lump sum (65% in my case) from a DC pension which is linked to a DB pension, can I defer taking the remaining 35% until the next tax year when I can use quite a bit of my personal tax allowance against it?

Thanks.

IanSt

I can't see why not - provided of course that your scheme administrator will allow you to split the payments over the two years.

I've assumed here that you've made sure that it makes financial sense take the final 35% in one go and take the tax hit.

Linton

If you held a simple DC pension in principle you could take the tax free lump sum in multiple tranches. In practice this may not be possible within the rules of the scheme and you would have to transfer the pension elsewhere.

I assume in your case that 25% of the 65% TFLS derives from the DC part of the pension and the remaining 40% is generated by the DB pension. Transferring the DC part of the pension elsewhere presumably wouldn't work as you would lose the linkage to the DB pension. So you definitely need to talk to your pension administrators to find out if what you want to do is possible.

Vendee

Thanks for your answers. I did contact the pension administrators a couple of days ago but the chap I spoke to was unsure. He said he would take advice and write to me within 5 working days. I was just trying to get a heads up on what the answer might be.