MPAA advice please

Cear

HI All

Please may I ask for some help with understanding pensions.

I started seriously looking into pensions Easter last year (left this way too late to start understanding about pensions) and found out that I had a DB deferred work pension I didn't know about and the pension that I thought was this work pension is actually a DC pensions consisting of payments from  having opted out of SERPS which apparently I cannot add to so is also a deferred pension I assume yes/No? 

Also have another DB Deferred pension and also a current DB and DC work pension.

I am 53 and due to start getting SP at 67 current work DB and DC pension due to pay out at 67.

The 2 deferred DB pensions and the deferred DC pension are due to pay out at 60. I have the option to defer the DC pension further to a later date. 

My understanding is that I can take the 2 DB pensions at 60 no problem and no MPAA will be triggered as they are DB pensions yes/No?

But with the deferred DC pension (at present value £32000) if I take this at age 60 will it trigger MPAA as I am not in theory taking it early according to the plan but taking it earlier than SP due to the government moving my retirement date from Age 60 (when pension started) to age 67. 

And I am correct on understanding that if MPAA is triggered then I can only contribute £4000 a year to pension plans is this DB and DC plans and does this include Employer contributions?

Thank you in advance to all for your help with this

Dazed_and_C0nfused

I am 53 and due to start getting SP at 67 current work DB and DC pension due to pay out at 67.

The 2 deferred DB pensions and the deferred DC pension are due to pay out at 60. I have the option to defer the DC pension further to a later date. 

DC pensions don't usually have a normal pension age, you can take funds once you reach 55 (due to change in a few years).  Not that it's necessarily a sensible thing to do but you're not tied to 67.

My understanding is that I can take the 2 DB pensions at 60 no problem and no MPAA will be triggered as they are DB pensions yes/No?

Correct 

But with the deferred DC pension (at present value £32000) if I take this at age 60 will it trigger MPAA as I am not in theory taking it early according to the plan but taking it earlier than SP due to the government moving my retirement date from Age 60 (when pension started) to age 67. 

Correct.  But it is your choice when to take this.  It's not taking it at 60 that triggers MPAA it is flexibly accessing any taxable income, even just £0.01, that triggers MPAA.  Buying an annuity with it wouldn't trigger MPAA.

And I am correct on understanding that if MPAA is triggered then I can only contribute £4000 a year to pension plans is this DB and DC plans and does this include Employer contributions?

MPAA is Money Purchase Annual Allowance so only applies to DC schemes.  And yes, it does include employer contributions (to a DC scheme).

Albermarle

this work pension is actually a DC pensions consisting of payments from  having opted out of SERPS which apparently I cannot add to so is also a deferred pension I assume yes/No? 

DC pensions are never deferred, this only applies to DB pensions that are not still actively being contributed to.

This DC pension is basically a pot of money, that continues to be invested and fees taken, whether you are still contributing to it or not. The only age related limit is that the earliest you can take is age 55 currently, ( soon to go up to 57) and you can not contribute to it anymore once you are 75. As said above the ages you mention for taking a DC pension are just nominal, although if you are invested in a so called lifestyle fund in any of them that derisks as you approach retirement, then they will be using the nominal retirement age as part of their process. Normally you can just go into the website and change the age as it has no legal meaning.

In the same vein, when you take a DC pension can be unrelated to when you actually stop work and it has no connection with the SP age either.

DB pensions do have a Normal Retirement age ( NRA) , usually 60 or 65. Normally you can take them earlier with a reduced pension, but usually not later ( sometimes possible though)

Cear

Thank you both for your answers. 
The DC account states retirement age as 60 but this must be just what was set when the account was set up like I say I do have the option to change it so will do so. 
I assumed it was a deferred pension as been told I can't add to it. So thank you for correcting me that it is not classed as deferred that is really useful to know. 
I think I understand it all now and again thank you.

Marcon

Albermarle said:

this work pension is actually a DC pensions consisting of payments from  having opted out of SERPS which apparently I cannot add to so is also a deferred pension I assume yes/No? 

DC pensions are never deferred, this only applies to DB pensions that are not still actively being contributed to.

They are if they are occupational (trust based) DC pensions.

Bimbly

With a DC (defined contribution, "pot of money") scheme, you can take the first 25% tax free without triggering the MPAA. Once you take anything from the remaining 75%, the taxed portion, that would trigger the MPAA.

Albermarle

Marcon said:

Albermarle said:

this work pension is actually a DC pensions consisting of payments from  having opted out of SERPS which apparently I cannot add to so is also a deferred pension I assume yes/No? 

DC pensions are never deferred, this only applies to DB pensions that are not still actively being contributed to.

They are if they are occupational (trust based) DC pensions.

I should have known not to use such definitive phrases as 'never' when talking about anything to do with pensions !

Albermarle

The DC account states retirement age as 60 but this must be just what was set when the account was set up like I say I do have the option to change it so will do so. 

Whether you change this age or leave it as it is, it still has no effect on when you can take the pension. This will only happen when you contact the provider, to start the process.

However changing the age may affect how your pension is invested, if it is in a fund that derisks as you approach the retirement date they have in their system. So changing it to a later date will delay the derisking if you are in that kind of fund,

Also the provider will automatically contact you in the months leading up to your 'retirement date', giving you the options available. One will be to do nothing .