BBC pension

NickTT

Hello Everyone,
I am looking for some advice regarding my BBC pension. I have a few questions that I would be grateful if members could help answer.
1)I would like to cash the pension in as I already have another pension through my local government scheme. Can the provider refuse to let me do this?
2) Can it all be taken as cash?
3)Will any lump sum taken be taxable?
4)Must remainder go to a defined benefit scheme?
The cash value is approx. £170,000
It is a deferred benefits scheme
Thanks
Nick

Linton

NickTT wrote: »

Hello Everyone,
I am looking for some advice regarding my BBC pension. I have a few questions that I would be grateful if members could help answer.
1)I would like to cash the pension in as I already have another pension through my local government scheme. Can the provider refuse to let me do this?

You cannot directly cash-in your BBC DB pension. You would have to transfer it to a personal pension which will let you take cash. To make the transfer the law requires you to first receive advice from a suitably qualified IFA, which may well be not to transfer. You do not have to follow the advice but if you dont your choice of which provider you can use for your personal pension will be very limited.

2) Can it all be taken as cash?

You can take it as cash provided you are at least 55. 25% will be tax free, the rest taxed as income. So you would be foolish to take it all in one lump sum as that would make you an extra-rate tax payer so spread the drawdown over several tax years.

3)Will any lump sum taken be taxable?
4)Must remainder go to a defined benefit scheme?

I assume you are talking about what happens if you transfer the £170K to a private pension. What people often do when they transfer out of a DB scheme is to invest the pension in share funds and take a drawdown income. 25% is tax free - the main options are to take 25% of the total as a tax free lump sum and pay income tax on all the drawdowns or have 25% of each drawdown tax free. You could buy an annuity but if you do this there is a good chance that staying in the BBC scheme would have been a better deal.

hyubh

NickTT wrote: »

1)I would like to cash the pension in as I already have another pension through my local government scheme. Can the provider refuse to let me do this?

Given the CETV size, by law, you will need to take professional advise to transfer out to a money purchase arrangement in order to maximise the amount of cash taken. Also, your preferred DC provider can't be made to accept. There have been many previous threads on the general topic - have a browse.

2) Can it all be taken as cash?

Given you are way over the trivial commutation limits, you would need to transfer out first to do that, and then only to pay a lot of tax (this is assuming you are 55 or over).

3)Will any lump sum taken be taxable?

Normally, anything over 25% the value (or notional value) if the pension. If you transferred out to take more, the extra would be taxed at your marginal rate.

4)Must remainder go to a defined benefit scheme?

If you took cash without transferring out, you would start drawing your scheme pension at the same time. If you transferred out, could pick and choose when to draw the rest. However, you would have given up the scheme pension entirely by transferring out.

The cash value is approx. £170,000
It is a deferred benefits scheme

xylophone

https://www.royallondon.com/about/media/news/2018/may/five-good-reasons-to-transfer-and-five-good-reasons-not-to-royal-london/

You have a deferred Defined Benefits Pension.

https://www.bbc.co.uk/mypension/aboutthescheme/glossary#heading-deferred-member

In view of the value of the benefits you will need to pay for the advice of a Pension Transfer Specialist.


The general information here may be worth a look

https://harrisonbrook.co.uk/do-you-hold-a-bbc-pension-scheme/

If you succeeded in transferring your pension into a DC scheme, you could not access it until you were 55.

You could have the option of a 25% tax free lump sum - the balance would be taxed as income in the year of receipt.

AlanP_2

How old are you - You can't access pensions before 55?

Is the 170k a quoted CETV (transfer value) from the BBC?

How much annual pension are you giving up for that 170k transfer?

Provider e.g. BBC can't stop you transferring out normally, not aware BBC is an exception to this.

You would need to engage an Independent Financial Adviser with the appropriate pension transfer permissions and qualifications to advise you on the transfer. Legal requirement for any DB with benefits of >£30K.

NickTT

Thanks Alan,
I am 54 and will be 55 in July next year
The amount payable annually would be £3,500 at 55
The quotable is from the BBC

Thrugelmir

NickTT wrote: »

T
The amount payable annually would be £3,500 at 55

And at normal retirement age?

NickTT

Hello,
It would be £4,014 at 67

kidmugsy

NickTT wrote: »

It would be £4,014 at 67

Good heavens. I'd take it early then, if I took it at all.

One thought: is the inflation-protection identical for the pension in payment (e.g. from 55) and in deferment (i.e. from 55 to 67)?

I suppose my conclusion is that the natural comparison for the £170k is to the alternative of drawing the pension at 55.

Then the ratio of CETV:annual pension is about 50. Good Lord!

So if you transferred, kept the money as cash in your new pension until The Crash has happened, and then bought (let us say) a Vanguard Lifestrategy fund, or the like, yielding about 2% p.a., you could draw about the same £3,500 p.a. while hoping that your capital would grow.

Can these figures be right? Why is the Beeb proposing to waste my money on such an epic scale?

greatkingrat

I think those figures are wrong. I'm not sure which of the various sections of the BBC Pension Scheme he is in, but they all appear to have a reduction factor of 24% or more if taken at 55.