Using Triggered DB pension to pay into new DC pension pot

Mick70

apologies for 2nd posting on here today ☺
I was kicked out of our DB pension scheme this year, as had protected status it will be triggered next May when turn 50. we have been enrolled now into a new DC pot where I and the employer are contributing into monthly.
The DB pension will be approx £26.7k pa rising with rpi
While I am still employed I do not need access to this pension money but would like to get my DC pot built up as quickly as possible .
The pension of £26.7k will all be taxed at 40% as i am a 40% tax payer salary.
Any advice is appreciated on how best to get as much as possible of this DB £26.7K pension into my DC pot each year
My understanding is that the 26.7 will be taxed at 40% leaving only 16k going into my bank each year (1.33k per mth?) and as such I should increase my employee contributions by 1.33k per month ? but is the 40% tax simply lost ? is there any way i can get more of this db pension into my dc pot over the years ?

thanks for any help with this

Mick

Paul_Herring

What form does your current DC contributions take? Net-pay, salary sacrifice or relief-at-source?

Simplistically, whichever it is, the likely course of action would be to contribute as much as possible to your DC pension. Which is likely to be £40K (gross) if you're a 40%er before this DB pension, but may/will be less if you're getting £110K/£150K or more.

Are you absolutely required to take the DB pension? No option to defer?

xylophone

You had protected status so that you had the option to take the pension from 50 but

was this actually the Scheme Normal Retirement Age?

Do you have the option to defer and if so in what terms?

Otherwise, if you took the pension, you would opt to contribute as much as possible to the DC Scheme from your earned income so as to avoid 40% tax.

Mick70

Paul_Herring wrote: »

What form does your current DC contributions take? Net-pay, salary sacrifice or relief-at-source?

Simplistically, whichever it is, the likely course of action would be to contribute as much as possible to your DC pension. Which is likely to be £40K (gross) if you're a 40%er before this DB pension, but may/will be less if you're getting £110K/£150K or more.

Are you absolutely required to take the DB pension? No option to defer?

Hi paul - the current DC is straight from pay (not salary sacrifice), def 40% tax bracket, unfortuanately cannot defer the DB , It will trigger when 50 next year .

Mick70

xylophone wrote: »

You had protected status so that you had the option to take the pension from 50 but

Do you have the option to defer and if so in what terms?

Otherwise, if you took the pension, you would opt to contribute as much as possible to the DC Scheme from your earned income so as to avoid 40% tax.

normal retirement age would have been 60 - as had protected status it triggers at 50.
I have no choice but to take the pension, eventhough will still be working. hence wanting to get as much of it into my new DC pot as possible over next few years

JoeCrystal

Mick70 wrote: »

normal retirement age would have been 60 - as had protected status it triggers at 50.
I have no choice but to take the pension, eventhough will still be working. hence wanting to get as much of it into my new DC pot as possible over next few years

You are certainly in most enviable position! I would love to have £26k index-linked income from 50! I will be able to retire right away if I in your position!

Mick70

JoeCrystal wrote: »

You are certainly in most enviable position! I would love to have £26k index-linked income from 50! I will be able to retire right away if I in your position!

unfortunately Joe, my wife has next to no pension provision and we still have 2 children at home to support ☺

JoeCrystal

Mick70 wrote: »

unfortunately Joe, my wife has next to no pension provision, and we still have two children at home to support ☺

Someone once told me a long time ago that to have a stress free life is not to have any spouses, children and cars. Still, having that income is going to be quite helpful for you and your family in the long run!

LHW99

If your wife has low pension provision, consider using any spare income to pay into your wife's pension after you have put enough in yours to get out of the 40% bracket.

xylophone

normal retirement age would have been 60 - as had protected status it triggers at 50.

In such circumstances, there is normally an option to take benefits at 50 rather than an obligation?

Mick70

xylophone wrote: »

In such circumstances, there is normally an option to take benefits at 50 rather than an obligation?

I will email the provider to check but as our company scheme deficit was all paid up on purpose to get us out of the scheme I am almost certain I have to take it at 50 next year (the other staff were already over 50 and got theirs straightaway)