LTA Query when receiving both DB and DC pensions ?

Hopeless2

hi,
how is the LTA impact calculated when you receive both DB pension and DC pension ?
I was originally told that the DB LTA is 20 times the initial db pension, plus the lump sum ?  is this correct ?   or does it change year on year as the annual DB pension rises with inflation ,  or is it set in stone what % of the LTA that takes up when it is initially triggered.  And what if you get your DB pension for 30 years say ?
thank you for any explanation
hopeless

hugheskevi

I was originally told that the DB LTA is 20 times the initial db pension, plus the lump sum ?  is this correct ?  

Yes

or does it change year on year as the annual DB pension rises with inflation ,  or is it set in stone what % of the LTA that takes up when it is initially triggered...And what if you get your DB pension for 30 years say ? 

Once assessed, that is it - set in stone as % of LTA used in the year of commencement. How long you receive it does not matter.

how is the LTA impact calculated when you receive both DB pension and DC pension ?

Each time you commence a pension the LTA usage is assessed. This is as a % of the LTA value in the year of commencement. DB is calculated as above [ (pension x20) + lump sum ] / LTA whilst DC (assuming drawdown or UFPLS) is just the pot value crystallised / LTA. Crystallisation being the technical term for when pension is taken.

Each time a new pension is taken, the % of LTA used is added to what has previously been used up. If at some point you exceed 100% of LTA, a charge arises on the amount of pension being crystallised which exceeds 100%, and all future pension crystallisations.

Note that when taking a pension, a pension commencement lump sum crystallises before taxable income. Pension commencement lump sum availability is limited to 25% of available LTA, so thought should be given to the order of crystallisation where there is DB and DC pension (eg, you may not want to take a lump sum from a DB scheme due to a low commutation rate, in which case commencing a DC pension first could be preferable).

shinytop

The links below explain how the tax is calculated on a DB pension.  It's relatively easy to work out the LTA excess tax due.  How that translates to a reduction in your annual pension is a little more vague and (I think) is worked out by your provider.  
https://www.bma.org.uk/pay-and-contracts/pensions/tax/nhs-pension-lifetime-allowance
https://www.nhsbsa.nhs.uk/sites/default/files/2019-05/Lifetime Allowance Charge examples-20190508-(V3).pdf