USS - General discussion

NickBFS

I don't understand the underlying logic of MPLMPL's method of calculating the maximum TFLS that can be withdrawn from the IB when taking IB and RIB at the same time but it seems to accord with the figures produced by the benefit conversion tool (at any rate it does in my case): the conversion tool will not let me take 25% of the IB as part of the TFLS in addition to the 3xDB TFLS but it will let me take the amount as calculated by MPLMPL's method as the most I can take (without commutation, that is).

Doctor_Who

NickBFS said:

I don't understand the underlying logic of MPLMPL's method of calculating the maximum TFLS that can be withdrawn from the IB when taking IB and RIB at the same time but it seems to accord with the figures produced by the benefit conversion tool (at any rate it does in my case): the conversion tool will not let me take 25% of the IB as part of the TFLS in addition to the 3xDB TFLS but it will let me take the amount as calculated by MPLMPL's method as the most I can take (without commutation, that is).

Isn't the logic to take just enough TFLS when you take the RIB pension so that any remaining IB pension still has 25% TFLS available for use at a later date (i.e. via UFPLS or drawdown).

NickBFS

Doctor_Who said:

Isn't the logic to take just enough TFLS when you take the RIB pension so that any remaining IB pension still has 25% TFLS available for use at a later date (i.e. via UFPLS or drawdown).

Ah, I get it at last! Thanks for the explanation.

MPLMPL

swindiff said:

Do you know if you are actually allowed to do this, as I have not seen this option suggested anywhere else?

I hope so, as that's my intention in a year or so! There have been a few threads about this in the last year or so, I've lost track, but I'm sure some have been successful getting these quotes/achieving this outcome. It is not the default quote or option that USS provide though, so you have to specifically ask for it. 

@bluenose1 posted on a recent thread:
"There have been a few discussions on here re USS as the options they provide aren’t very clear.

As you have both a DB and DC. pot you should consider  taking them at the same time as it increases the tax free cash in your DC pot without reducing your DB income.

The problem is they don’t do this quote automatically which seems bonkers to me as most people wouldn’t be aware. 

You would require a quote for

a) Max TFLS

b) NO commutation "

bluenose1

Well I can be a test case that it works as decided I am leaving beginning of January 24, will provide work with  3 months notice, so hopefully I can receive the pension quote for the max tax free lump sum with no commutation before I actually leave…..

swindiff

I don't really understand why the modeller would automatically choose the option of commuting your DB lump sum into extra pension, especially when the commutation rate is so poor.  It does state that this is the default option.

I just put my figures in and my £57,810 DB lump sum is commuted to an extra £1858 per year pension. Thats 31.11x

Also as mentioned before the calculation for the max TFLS does not seem to quite add up.

(£19260 x 20) + £57810 + £180,180 = £623,160
£623,160 x 0.25 = £155,790

Yet the max tax free lump sum offered is £140,786

This is close to but not exactly what the TFLS might be if you were not taking into account the already tax free DB lump sum?
(£19260 x 20) + £180,180 = £565,380
£565,380 x .25 = £141,345

swindiff

Even if I choose a tax free cash amount which is within the limits of the DB lump sum, its still commutes all the DB lump sum to extra pension and takes all the TFLS from the IB

Doctor_Who

swindiff said:

Also as mentioned before the calculation for the max TFLS does not seem to quite add up.

(£19260 x 20) + £57810 + £180,180 = £623,160
£623,160 x 0.25 = £155,790

Yet the max tax free lump sum offered is £140,786

Isn't this because there is still some tax free cash in the remaining IB? In your case ~£10K of TFC, admittedly this still doesn't make ~£155K of TFC, 'only' ~£150K in total.

It's odd that the modeller doesn't allow you to control all 3 figures (pension, TFC, remaining IB), but only TFC and remaining IB (under further modelling options). If you could 'fix' your pension figure then the modeller wouldn't commute TFC to pension. As USS say, the modeller is only an 'illustration' of what you may get, the only sure way to know is to get them to quote for various options.

swindiff

I guess that could have something to do with it, but as you say it still does not quite add up.  Does the remaining IB still have a tax free element, or has this been used up when taking the TFLS?

Doctor_Who

swindiff said:

I guess that could have something to do with it, but as you say it still does not quite add up.  Does the remaining IB still have a tax free element, or has this been used up when taking the TFLS?

Not 100% sure about that - if the IB didn't have any TFC left then UFPLS wouldn't be an option and that could complicate withdrawals later on. It does say the remaining IB 'can be taken flexibly', which I would interpret as including UFPLS.