Drawing DB pension with DC AVC's attached.

Joey_Soap

Hello all. Soon, I will have the benefit of a deferred DB pension coming into payment (about GBP 11k a year) and I have a question I'd like to pose here before talking to the DB pension administrators at Mercer. This is a deferred DB pension from an ex employer. While I was employed there I paid a small but regular sum into the company AVC scheme run by an insurance company. These are/were not a free standing AVC, but they do form a separate DC pot from the DB scheme pot. The AVC pot is only going to be about GBP 10k absolute maximum. So, the annuity (or a draw down) benefit would be pitiful. Since I am not going to take a tax free lump sum from the DB scheme, can I add together the value of the DB + DC pots and take the circa 10k DC pot as my tax free lump sum? Is this possible? Does it depend on the scheme rules?


(I would add that it is a not possible to transfer just the AVC pot to my SIPP, I tried that already a while ago. For a transfer, it is "all or nothing", DB + DC or nothing at all. That surprised me somewhat but it is the scheme rules).


Thanks.

HappyHarry

It depends on the scheme rules.

If you can take the tax-free sum from the AVC, then it's a great benefit.

Joey_Soap

HappyHarry wrote: »

It depends on the scheme rules.

If you can take the tax-free sum from the AVC, then it's a great benefit.

Exactly. I'll have to speak to Mercers I think. I imagined there may have been a general/typical way these things work. But maybe not.

greenglide

Do you have a scheme booklet or is there one on the internet?


The scheme booklet for my scheme contained this information and they offered other options on top of what was in the booklet.


These things aren't necessarily detailed in the scheme rules.

Triumph13

Joey_Soap wrote: »

(I would add that it is a not possible to transfer just the AVC pot to my SIPP, I tried that already a while ago. For a transfer, it is "all or nothing", DB + DC or nothing at all. That surprised me somewhat but it is the scheme rules).


Thanks.

When you say 'a while ago' was that pre April 2015? Post then there has been a statutory right to transfer DC funds separately from DB. Not that you would want to do this if the scheme rules allow you to link them for TFLS purposes of course!

Joey_Soap

Triumph13 wrote: »

When you say 'a while ago' was that pre April 2015? Post then there has been a statutory right to transfer DC funds separately from DB. Not that you would want to do this if the scheme rules allow you to link them for TFLS purposes of course!

Indeed. Years before 2015. Thanks, I was unaware of this specific change. First port of call now is Mercers.

Joey_Soap

greenglide wrote: »

Do you have a scheme booklet or is there one on the internet?


The scheme booklet for my scheme contained this information and they offered other options on top of what was in the booklet.


These things aren't necessarily detailed in the scheme rules.

Thank you. I need to check, but from memory, the scheme rules were only in the handbook for the DB plan. AVC was not included, but I will check. Cheers.