Taking out a lump some from my old DB pension

frankraz

Hi All

I was wondering whether someone can help me with the following as I am not 100% sure.

I had a DC pension when I was working in Private sector, since then  I left my employment and now am back in Public sector which has a DB pension scheme. As I wasn't contributing to my DC pension I cashed in all my pension sum out which was about 28K and the first 25% was tax-free and have paid the tax on the rest.

I have another pension which is LPFA from when  I used to work at a university until 2013. This pension which is DB has been frozen since 2013. I am now 56 and want to ake the pension out as my current pension SAUL does not allow me to transfer my other DB pension into it. I want to know if I take the minimum amount out i.e. 25% do I need to pay tax on this as I cashed in my DC pension last financial year and had a 25% tax-free entitlement already accounted for or because they are two different schemes i.e. DC and DB I still can take the tax-free amount out?

I hope I am clear on what I am aiming to do

Any advice/help will be appreciated.

xylophone

 have another pension which is LPFA from when  I used to work at a university until 2013. This pension which is DB has been frozen since 2013. I am now 56 and want to ake the pension out as my current pension SAUL does not allow me to transfer my other DB pension into it.

This  seems to be an LGPS pension -  and if so it is deferred rather than frozen.

This is completely different from a DC pension. 

In order to access it, you would either have to transfer out into a DC pension ( and if the value of the benefits is over £30,000, take the advice of a pension transfer specialist in order to do so)

https://www.pruadviser.co.uk/knowledge-literature/knowledge-library/pension-transfers-conversions/

or you would need to see whether it was possible under the scheme rules to take the pension early - this would enable you to commute some of the pension to a tax free pension commencement lump sum and receive a monthly pension.

https://www.pruadviser.co.uk/knowledge-literature/knowledge-library/pension-transfers-conversions/

Marcon

frankraz said:

Hi All

I was wondering whether someone can help me with the following as I am not 100% sure.

I had a DC pension when I was working in Private sector, since then  I left my employment and now am back in Public sector which has a DB pension scheme. As I wasn't contributing to my DC pension I cashed in all my pension sum out which was about 28K and the first 25% was tax-free and have paid the tax on the rest.

I have another pension which is LPFA from when  I used to work at a university until 2013. This pension which is DB has been frozen since 2013. I am now 56 and want to ake the pension out as my current pension SAUL does not allow me to transfer my other DB pension into it. I want to know if I take the minimum amount out i.e. 25% do I need to pay tax on this as I cashed in my DC pension last financial year and had a 25% tax-free entitlement already accounted for or because they are two different schemes i.e. DC and DB I still can take the tax-free amount out?

I hope I am clear on what I am aiming to do

Any advice/help will be appreciated.

The two schemes are treated separately.

You can't 'take the minimum 25% out' from your DB scheme. If you want to take a tax free cash lump sum from a DB pension, you can only do so at the time the pension comes into payment. In a DB scheme, the maximum tax free cash you can take is set by the scheme's own rules (subject to the over-riding maximum stipulated in general legislation). 

xylophone

https://www.lgpsmember.org/arl/already-left-when.php#:~:text=You can choose to take,before your Normal Pension Age.&text=This means if you left,in full at age 65.
may be of interest.

frankraz

Dear All
Thank you for all the replies.
To answer question in replies,  yes this is a deferred scheme and not frozen and I am able to cadk in. I suppose my question is if I take the lump sum which the scheme allows me to do , will this still be tax free as I cashed up my DC pension ladt financial year which included the 25% tax free. Or if I take the lump sum will I have to pay tax snd also will this effect my current pension contribution allowance. The value of the lump sum is 31k.
Thanks 

Dazed_and_C0nfused

There is no automatic 25% with a DB pension.

The TFLS with a DB scheme is set by the scheme rules (within certain HMRC limits).

With a DB scheme you cannot normally take any TFLS at a different time to the pension.

So if you wanted to take whatever TFLS was available now you would have to take the pension income as well and this would be subject to whatever actuarial reduction the scheme rules specify.

Tax free lump sums are just what they say on the tin, tax free.  But whether this is a sensible option for you is another matter.

frankraz

Thanks for reply. Yes what thry have told me is that I can take min 31k as lump sum and the rest as pension income on monthly basis. Is the lump dome subject to tax?

Dazed_and_C0nfused

Is the lump sum a tax free lump sum?

frankraz

Yes that is what they said. My question is as I cashed my DC pension in the last financial year which included the 25% tax free entitlement would i still qualify for tax free now?

HappyHarry

frankraz said:

Yes that is what they said. My question is as I cashed my DC pension in the last financial year which included the 25% tax free entitlement would i still qualify for tax free now?

Your tax free lump sum from your DB pension remains tax free, regardless of any previous withdrawals from a DC scheme.

(Assuming taking the DB scheme does not push you over the LTA of £1,073,100)

Dazed_and_C0nfused

Each pension is treated separately so you can take 25% TFLS from each DC pension and whatever the scheme rules allow from DB pensions.

It isn't just 25% from whatever happens to be the first pension you access.