Taking a DB pension and still paying into a private pension.

NOIDEA

Hi   
I have a works railway DB pension that I can take at 62 with no penalties,  this will be roughly 18k  and including brass 100k plus tax free lump sum.     I also have  a small private pension that will be worth 80K  with a GAR of 6% IF I continue to pay £82 a month until I take  it out on 65th birthday,  I loose the GAR if I stop payments or take this pension at any other time it seems.  I am quite happy with the timing of this.    I cannot move my small private pension to my railway pension btw.   

The question is should I fear any tax implications on continuing to pay the small private pension for the three years between taking my DB pension and private pension.    I am well within the lifetime allowance and with  only 1k per year  paid into the private pension  I take it I am far from any pension recycling rules?..  
Cheers.

NOIDEA

I should say the DB will be 18k annually plus 100k plus brass all going well,  can't seem to edit original post.

AlanP_2

Recycling will not be an issue to worry about.


Congrats, a nice position to end up in.

sheslookinhot

I believe when starting to draw on a pension you are limited to £2880 of annual contributions to a private pension.

Dazed_and_C0nfused

sheslookinhot said:

I believe when starting to draw on a pension you are limited to £2880 of annual contributions to a private pension.

That is only for people with no pensionable earnings or pensionable earnings of less than £3,600.

NOIDEA

Well that was quick and straight forward thanks for putting my mind at rest chaps.

xylophone

I believe when starting to draw on a pension you are limited to £2880 of contributions to a private pension.

There is some confusion here.

You are only limited to a contribution of £2880 (net)  £3600 (gross) if you have no relevant earnings/ relevant earnings under  £3600 (gross).

If you have a DC pension and withdraw anything over the 25% Pension Commencement Lump Sum, you trigger the Money Purchase Annual Allowance in respect of further contributions to a DC pension (but not a DB pension) - this limits you to a contribution of  £4000 (gross).

If you take benefits from a DB pension, this does not trigger the MPAA.

jamesd

I see around 4.8% for an open market level single-life annuity so 6% currently looks good but what type of annuity is it?

If you defer claiming your state pension you get an increase of 5.8% a year and this increase gets CPI inflation increases, so it looks like a better deal to take the money and fund deferring. Maybe bug annuity with some and defer with the rest.

Health and lifestyle are factors too. You might get a higher quote if not perfect.

NOIDEA

Hi  it is a single life annuity not inflation linked but with a 5 year guarantee at 6%  and the fund has  a guaranteed fund value of 80k ish.   I def will look at what the choices and options  are at time of taking the product.  Really I should get someone to look at it now and see if the pot would be better somewhere else,  have a feeling the time to have done that was 10 years ago.

NOIDEA

5 year guarantee to pay out to spouse that is.    I don't think in any way it was a great performing fund and as said should have got advice on it years ago, maybe to late now.