DB Pension - lifetime allowance

Mick70

Morning all ,
using figures that are easier to calculate .
If DB pension I am now receiving was 25k pa and lump sum 50k and LTA is a straight £1m.  Then I think the LTA % would be 55%? (25x multiple of 20, plus, 50 lump sum = 55% of £1m.) 
I am sure the above is right but my query is , as the DB pension increases each year with rpi does the LTA % also change it is it set in stone at 55% ?  Also what if the LTA changes ?
so, 10 year later that DB maybe £30k pa ? And the LTA maybe £1.1m?

may seem irrelevant but it is important if like me still working and want to build up a DC pot as was kicked out of the DB pension before reached the magic 40 years service .

thanks in advance ,
Mick 

shinytop

As I understand it, the LTA  % is calculated from the DB pension and TFLS in the FY you take it along with the prevailing LTA .  You've used that % and that's it, there is no further calculation.  Your 55% stays at 55%.  The remaining 45% can be used for other DBs or DCs.  And it'll be 45% of whatever the LTA is at the time.

Albermarle

Also if you take the pension early , with a reduced pension/lump sum . This figure is used to calculate the LTA.
So there is a benefit to take a DB pension early ( all other things being equal) if you are close or over the LTA .

Croeso69

Albermarle said:

Also if you take the pension early , with a reduced pension/lump sum . This figure is used to calculate the LTA.
So there is a benefit to take a DB pension early ( all other things being equal) if you are close or over the LTA .

Seconded. I did this to ensure any future LTA tax was on my DC pot rather than on my guaranteed benefit, albeit tiny compared to @Mick70 's provision as both DB add up to just £11k.

Marcon

Mick70 said:

Morning all ,
using figures that are easier to calculate .
If DB pension I am now receiving was 25k pa and lump sum 50k and LTA is a straight £1m.  Then I think the LTA % would be 55%? (25x multiple of 20, plus, 50 lump sum = 55% of £1m.) 
I am sure the above is right but my query is , as the DB pension increases each year with rpi does the LTA % also change it is it set in stone at 55% ?  Also what if the LTA changes ?
so, 10 year later that DB maybe £30k pa ? And the LTA maybe £1.1m?

may seem irrelevant but it is important if like me still working and want to build up a DC pot as was kicked out of the DB pension before reached the magic 40 years service .

thanks in advance ,
Mick 

Don't forget other savings vehicles are available, some with tax advantages.

Also - if you're getting near to the LTA, you could always make some personal contributions into 3 different pension pots and withdraw each of these before they hit the £10K mark, using the 'small pots' regime. If you do that, you are effectively increasing the LTA by up to £30K, since small pots count as 0% of the LTA.

Mick70

thank you,  no i am nowhere near to LTA  - think my DB came to about 60% or thereabouts , but it was triggered at age50 (long and complex story) , so just checkong how much , in theory, i could try to build up in my DC pot .  many thanks, makes sense now

Albermarle

Marcon said:

Mick70 said:

Morning all ,
using figures that are easier to calculate .
If DB pension I am now receiving was 25k pa and lump sum 50k and LTA is a straight £1m.  Then I think the LTA % would be 55%? (25x multiple of 20, plus, 50 lump sum = 55% of £1m.) 
I am sure the above is right but my query is , as the DB pension increases each year with rpi does the LTA % also change it is it set in stone at 55% ?  Also what if the LTA changes ?
so, 10 year later that DB maybe £30k pa ? And the LTA maybe £1.1m?

may seem irrelevant but it is important if like me still working and want to build up a DC pot as was kicked out of the DB pension before reached the magic 40 years service .

thanks in advance ,
Mick 

Don't forget other savings vehicles are available, some with tax advantages.

Also - if you're getting near to the LTA, you could always make some personal contributions into 3 different pension pots and withdraw each of these before they hit the £10K mark, using the 'small pots' regime. If you do that, you are effectively increasing the LTA by up to £30K, since small pots count as 0% of the LTA.

Its a good tactic if you are still contributing , but worth noting that not all pension providers will let you take the pot under the small pots rule . Some will just make a UFPLS payment which defeats the object . So you have to check first .

Croeso69

Albermarle said:

Marcon said:

Mick70 said:

Morning all ,
using figures that are easier to calculate .
If DB pension I am now receiving was 25k pa and lump sum 50k and LTA is a straight £1m.  Then I think the LTA % would be 55%? (25x multiple of 20, plus, 50 lump sum = 55% of £1m.) 
I am sure the above is right but my query is , as the DB pension increases each year with rpi does the LTA % also change it is it set in stone at 55% ?  Also what if the LTA changes ?
so, 10 year later that DB maybe £30k pa ? And the LTA maybe £1.1m?

may seem irrelevant but it is important if like me still working and want to build up a DC pot as was kicked out of the DB pension before reached the magic 40 years service .

thanks in advance ,
Mick 

Don't forget other savings vehicles are available, some with tax advantages.

Also - if you're getting near to the LTA, you could always make some personal contributions into 3 different pension pots and withdraw each of these before they hit the £10K mark, using the 'small pots' regime. If you do that, you are effectively increasing the LTA by up to £30K, since small pots count as 0% of the LTA.

Its a good tactic if you are still contributing , but worth noting that not all pension providers will let you take the pot under the small pots rule . Some will just make a UFPLS payment which defeats the object . So you have to check first .

Hargreaves Lansdown will create a £10k small pot from a bigger SIPP so just build up a £30k SIPP with them (or transfer in) and Bob is your mother's brother.