Wuls

AnotnaC7

Hello Guys,
I am aged 52 and currently employed with a company for whom I have worked for almost 30 years, I have been contributing to their pension scheme (Defined Contributions) I also have some Pre 97 GMP entitlement due to a change from DB to DC around 1993 which occurred with current employer not long after starting with them.
Before starting work with my current employer I served an apprenticeship with another company and contributed to another DC Plan, I have received notification that the Prudential plan to Wind up their Master Trust Scheme and I therefore have three options going forward, Stay Invested (In my own name), Transfer my Benefits or take a Winding up Lump sum. There is only about 10k in the pot and I was attracted to taking the WULS, my question is would this have any ramifications when I reach retirement age and come to act on my DC Pension pot that I hold with my current employer or even affect current pension tax allowances?

lisyloo

I believe that 75% of this is taxable as income.


https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm063600


If this will/might push you into higher rate income tax this tax year then you might want to reconsider if you expect to pay basic rate in retirement.


I believe this will take up part of your LTA (lifetime allowance).
This is currently £1,055,000 and expected to increase so this might be something you don't need to worry about?

xylophone

If you take the WULS as a lump sum, would you consider regarding it as an "income replacement" for part of your current salary and increasing your pension contributions for this year to your current scheme?

AnotnaC7

xylophone wrote: »

If you take the WULS as a lump sum, would you consider regarding it as an "income replacement" for part of your current salary and increasing your pension contributions for this year to your current scheme?

Xylophone, thanks for response, I had not considered this approach only really saw it as a little bonus but was concerned that it was classed as some form of pension that would affect my current allowances, certainly won't affect lifetime allowance as will be nowhere near that figure at retirement age.

[Deleted User]

xylophone wrote: »

If you take the WULS as a lump sum, would you consider regarding it as an "income replacement" for part of your current salary and increasing your pension contributions for this year to your current scheme?

Going back to the above link. there is government language - which I can't quite understand around taking it but also paying into other pension schemes

xylophone

Going back to the above link. there is government language - which I can't quite understand around taking it but also paying into other pension schemes

This?

https://www.pensionsadvisoryservice.org.uk/about-pensions/saving-into-a-pension/pensions-and-tax/pension-lump-sum-recycling

See conditions listed in link.

All of the conditions need to be met for the contributions to be classed as recycling. If all 6 conditions are not met, no recycling has occurred. Where recycling is found to apply this can result in large tax charges.

From the information given by the OP, it seems to me that he would be able to consider increasing his contributions from his salary to his existing pension without falling foul of the "recycling rules".