Taking DB early to avoid LTA

matt_splatt

Hi all, I have a question that I can’t find the answer to. I’m 50 and am trying to plan to to stay under LTA. I’ve got a decent deferred DB pension, a smaller DC that my employer and I are contributing to and a SIPP that I set up a number of years ago to make the most of the more generous AA levels before they shrunk.

I’m allowed to start taking the DB pension up to 10 years early (from 55) at a lower amount. If, for example, I take it five years early, the annual pension reduces by 16%. 
My question is: if I take the DB pension five years early, do I still calculate the percentage of my LTA used by multiplying the lower annual pension by 20? Or do I need to use a different multiplier?
I have used an IFA in the past, but thought I’d ask here first. 

hugheskevi

matt_splatt said:

My question is: if I take the DB pension five years early, do I still calculate the percentage of my LTA used by multiplying the lower annual pension by 20? Or do I need to use a different multiplier?

Yes, same multiplier - it is amount put into payment (whether reduced for early payment or not) multiplied by 20 (regardless of age when taken) plus lump sum (if any).

matt_splatt

Thought it might be too good to be true, but not this time. Thanks for confirming hugheskevi. 

Or am I missing a downside (other than trading off a lower pension for the extra years that I should receive it). 

My deferred pension is index linked, but so would my pension be. 

By taking the DB early enough I should squeeze into the basic tax band as a pensioner
Avoiding the LTA seems like a sensible thing to do

dimbo61

Maybe better off on the Pension and Retirement board rather than the Mortgage and Endowments board.
Are you making full use of your ISA,s ?

matt_splatt

Wrong board - schoolboy error. 
Can posts be moved?