Question about transferring DB / DC pensions

Skwizz

I'm 61, retired early (2016), and am drawing the most I can from my SIPP each year, without giving myself any income-tax liability (£16,666.66, this year).
I have transferred all of my pensions to my SIPP, which I manage/invest myself, via H-L (I know, I know. But I like their platform).
I have two other (small) company pensions, one defined benefit, the other defined contribution, which will start to pay out on my 66th birthday February 2026.
My state pension will also kick in at that time, eating into my annual personal tax allowance and I won't be able to use the full 25% lump sum I currently enjoy every year.
So I will stop using my SIPP for that purpose.
I will get a full state pension which I estimate, on top of either my DB or DC pension, will use up all of my annual personal allowance (just short).
But using both my DB and DC pensions would definitely take me over, and give me a tax liability.
I would like to avoid that by transferring one into my SIPP (I will be leaving anything left in it by then for my heirs to inherit).
Both DB and DC pensions have current transfer values above £30k.

MY QUESTION
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I'm aware that transferring a DB pension obliges me to take professional advice, an inconvenience and a cost I'd like to avoid.
I'd like to know if the same requirement applies to a DC pension as well?
If not, I would likely transfer the DC pension to my SIPP and leave the DB pension to run its' course, as is.
Otherwise I'll probably transfer the DB (slightly bigger) and suck up the cost, if I can find an advisor to do it, obviously.
Thank you for your time and effort in responding.

Cus

A transfer from a regular DC like a workplace or sipp to another sipp should be simple and does not need paid advice. It can take a number of weeks to line it up, there are threads on here about how long it can take, but also shouldn't cost anything, unless the DC you are transferring from has particular rules or costs applied when transferring out.

Marcon

Cus said:

A transfer from a regular DC like a workplace or sipp to another sipp should be simple and does not need paid advice.anything, unless the DC you are transferring from has particular rules or costs applied when transferring out.

It does if it has any sort of guarantees ( 'safeguarded benefits') such as guaranteed annuity rate or other 'promise'. 

Albermarle

I have two other (small) company pensions, one defined benefit, the other defined contribution, which will start to pay out on my 66th birthday February 2026.

There are no set dates for taking a standard DC pension , except that the earliest age is 55.

Often the pension info will have a retirement date but this is not binding in any way . In fact you do not have to take it at all if you do not want.

Skwizz

Thanks for your feedback all.
This info. all helps my plans a great deal.

tacpot12

Letting your DB pension run it's course is the best option. I would not worry too much about the tax you pay. Even if your annual income was £20,000, you would only be paying 7.5% in tax at most.  The main thing to focus on is that you have enough money to enjoy your retirement.

Albermarle

tacpot12 said:

Letting your DB pension run it's course is the best option. I would not worry too much about the tax you pay. Even if your annual income was £20,000, you would only be paying 7.5% in tax at most.  The main thing to focus on is that you have enough money to enjoy your retirement.

As they say only two things certain in life - Death & Taxes .
So as above do not worry too much about paying some tax , having the right retirement income strategy is more important.

Langtang

Albermarle said:
As they say only two things certain in life - Death & Taxes .

If I may ask a hypothetical question:

If I have no other income at all, and I start to use my own pension scheme to take c£6500 py from it, will this incur any income tax? I thought I knew the answer to this (no) but having read a few threads on here recently which talk of tax on the way in (gov't contribution) and tax on the way out (75/25 split) I am now beginning to wonder.

On the same theme, If when my SP kicks in, my total income is c£15,500, how is the tax deducted from the taxable part (over 12.5k) Is it taken from the SP or the private one?

Sorry if these seem obvious/stupid questions!

Sorry for the hijack, I have withdrawn and posted under a new thread.

MallyGirl

a pension of £6.5k would not incur any income tax if it is your only income. You have a personal allowance (0% band) of £12.5k right now.
I think you will get a change of tax code from HMRC when SP kick in so that the private one sorts the tax. If you haven't taken a tax free lump sum then 25% will be tax free and 75% taxable which won't leave you paying much tax.

Skwizz

Thanks all for feedback and apologies for not updating this earlier.

I was only interested in the question around my DB pensions so I had not added info around the remainder of my retirement income, which I shall do now for anyone else with similar thoughts.

I do take a base income from my SIPP, to the max of my personal allowance, each year.
But I have a comfortably sized ISA as well, from which I top up the rest of my income.
My state pension will kick in at the same time as my two small DB pensions.
When added together those three would likely take me over the personal allowance and the SIPP would become irrelevant (I'd forget about that and leave it to grow, as a tax-free inheritance for my heirs).

My income already comfortably exceeds my costs.
The difference is always re-invested to grow my 'stake' and ensure this continues throughout my retirement.
I was asking only to ensure my ongoing tax-efficiency.
"First world problems".

I should have provided this ISA info originally as well.
I see now that my omission caused some unnecessary concern over my income level later on.

Thanks again for all of your guidance and assistance.

pip895

Do you continue to add £2880/annum to your SIPP?  It is useful in effectively adding to your personal allowance and is still worth while even if you pay BR tax.  

This does assume you are nowhere near the LTA.  Until this year I was like you arranging to pay virtually no income tax.  Then I spotted that a couple more good years with investments would head me straight into LTA territory with my SIPP.  This has caused me to completely change tack and I now withdraw right up to the top of my BR band!

On a separate point HL were very helpful in sorting out the transfer of a number of my OHs DC pensions and soon flagged up that one had protected benefits that made it unsuitable for transfer.  Worth giving them a ring.