Which order might be "best", DC or DB pension drawing

Ldak

Hello All / Any
Would appreciate some pointers on the following.
My situation...
Not working, not currently planning to rejoin workforce.
63 years old. Married, wife working, independent kids, no mortgage or debt.
In receipt of two small DB pensions currently paying a combined £2350 less than the £12570 personal allowance.
Have the following...
£60k S&S ISA
£37k spread across two Royal London (RL) DC pensions
£5k in a Vanguard (VG) SIPP
Planning to move the RL pensions to VG as they'll have a 1% fee if put in drawdown with RL.
Have one more DB pension to claim offering £10.5k / year currently but with a Normal Retirement Age (NRA) of 65.
Could maybe use £10-20k as a lump sum soonish, even from the ISA.
Do you think I should take my DB pension first or run down the SIPP until or beyond NRA of the DB pension?
Many thanks in advance of any insights.

bostonerimus

Without knowing how much more you'd get in DB pension by deferring it, it's difficult to comment, but I have found that the regular income from a DB pension is very comforting when you are not working and it lets the DC side of things grow for a few more years - hopefully. If you can get by on DB pension, your spouses income and then SP when it starts you might be able to leave the DC and ISA balances as an inheritance.

Ldak

Thanks bostonerimus
I have today asked for a NRA quote to be generated.
Understood, but I can only choose the drawdown amount and vary it if needed from the DC pension, the DB pension will stay at whatever it gets initiated at. Suppose I could pay any excess into the SIPP.
Was thinking of something like this...

UnusedPersonalAllowance	2,350.80
Drawdown	7,934.40
UFPLSTaxFree(25%)Amount	1,983.60
GrossAmountTaxable	5,950.80
PersonalAllowance	2,350.80
NetAmountTaxable	3,600.00
TaxDue	720.00
PayableAfterTax	7,214.40
NetPensionContributionAllowance	2,880.00
TaxRefundable	720.00
AfterTaxDrawdownDisposable	4,334.40

greatkingrat

bostonerimus said:

Without knowing how much more you'd get in DB pension by deferring it, it's difficult to comment, but I have found that the regular income from a DB pension is very comforting when you are not working and it lets the DC side of things grow for a few more years - hopefully. If you can get by on DB pension, your spouses income and then SP when it starts you might be able to leave the DC and ISA balances as an inheritance.

I would say the opposite - if you leave the DB pension until 65 you'll get a higher amount which will presumably be even more comforting! It sounds like you have enough savings/DC pension to live off for the next couple of years so no need to take the DB pension early.

Ldak

Thanks https://forums.moneysavingexpert.com/profile/greatkingrat
That's what I was thinking especially as DB payments will be "hands off" as the brain gets (even) foggier...
Can pay "excess" DB income, once commenced, into the depleted SIPP to rebuild it for an inheritance.
Who said, "Spend a quarter on wine, a quarter on women, and squander the rest..."  Love that...

Marcon

Ldak said:

Thanks https://forums.moneysavingexpert.com/profile/greatkingrat
That's what I was thinking especially as DB payments will be "hands off" as the brain gets (even) foggier...
Can pay "excess" DB income, once commenced, into the depleted SIPP to rebuild it for an inheritance.
Who said, "Spend a quarter on wine, a quarter on women, and squander the rest..."  Love that...

You say you have no plans to rejoin the workforce, so will you have any earned income? If not, you're limited to £3,600 gross (i.e. you pay in £2,880 and tax claimed by the provider on your behalf will top that up to £3,600).

Ldak

Thanks Marcon.
No earned income and aware of the £3600 gross limit.
Hence why I thought to add the "NetPensionContributionAllowance..." back into the SIPP

Marcon

Ldak said:

Thanks Marcon.
No earned income and aware of the £3600 gross limit.
Hence why I thought to add the "NetPensionContributionAllowance..." back into the SIPP

Ah - sorry! I read it that you were planning to add 'excess' on top of that...

Ldak

Sorry I wasn't clearer...

Dazed_and_C0nfused

What is the rationale for taking exactly enough income from the SIPP to end up paying tax of £720?

Is this because the income is needed or because you think there is some connection between the personal income tax paid and basic rate tax relief added to a relief at source pension contribution?

Ldak

Hello Dazed..
I don't absolutely need the extra income from the SIPP, but thought to maximise the utilisation of my personal allowance whilst waiting for the non-actuarily reduced NRA uplifted valuation of the DB pension.
Found the idea from PensionPawn here https://forums.moneysavingexpert.com/discussion/comment/78333410/#Comment_78333410
Thought to rebuild the depleted SIPP from said DB income once taken at 65 years of age.
Have I misunderstood PensionPawn's suggestion?