Prudential personal pension - total confusion!

xylophone

One point to be very aware of is that if you take any taxable income via drawdown or an annuity, you will be restricted on how you much you can add to your current DB pension in future.

This requires nuancing  - the MPAA does not apply to DB as it does to contributions to DC.

https://adviser.royallondon.com/technical-central/pensions/contributions-and-tax-relief/money-purchase-annual-allowance/

What about DB?

Accrual under defined benefits schemes is not tested against the money purchase annual allowance, but will be included in the test of total contributions against the annual allowance/tapered annual allowance:

https://www.moneyhelper.org.uk/en/pensions-and-retirement/tax-and-pensions/money-purchase-annual-allowance-mpaa

Albermarle

xylophone said:

One point to be very aware of is that if you take any taxable income via drawdown or an annuity, you will be restricted on how you much you can add to your current DB pension in future.

This requires nuancing  - the MPAA does not apply to DB as it does to contributions to DC.

https://adviser.royallondon.com/technical-central/pensions/contributions-and-tax-relief/money-purchase-annual-allowance/

What about DB?

Accrual under defined benefits schemes is not tested against the money purchase annual allowance, but will be included in the test of total contributions against the annual allowance/tapered annual allowance:

https://www.moneyhelper.org.uk/en/pensions-and-retirement/tax-and-pensions/money-purchase-annual-allowance-mpaa

I knew taking a DB pension did not trigger MPAA, but  did not know that MPAA does not affect accrual of DB benefits, so thanks for the correction.

dunstonh

Legacy pru pensions don't support regular income drawdown.  They don't have an in-house annuity any more either.  Some of their plans support partial UFPLS and most support full UFPLS.      So, in reality, it usually means the person needs to transfer their pension to a modern plan to get the option they want in retirement.

Pru have an in-house sales team that will do this but their charges are higher than a typical IFA.

Brie

Dazed_and_C0nfused said:

Also are you sure you don't lose any DB pension you choose not to take at the schemes normal pension age?

I'm dazed and confused about this question?  How could someone lose their pension if they didn't take it at NPA?  Perhaps I've misunderstood what you're trying to say.

Dazed_and_C0nfused

Brie said:

Dazed_and_C0nfused said:

Also are you sure you don't lose any DB pension you choose not to take at the schemes normal pension age?

I'm dazed and confused about this question?  How could someone lose their pension if they didn't take it at NPA?  Perhaps I've misunderstood what you're trying to say.

I thought there had been posters before who hadn't taken a DB at NPA and then discovered that once applied for it was paid from the date of application onwards but the period between NPA and date of application wasn't paid retrospectively.

QrizB

Dazed_and_C0nfused said:

Brie said:

Dazed_and_C0nfused said:

Also are you sure you don't lose any DB pension you choose not to take at the schemes normal pension age?

I'm dazed and confused about this question?  How could someone lose their pension if they didn't take it at NPA?  Perhaps I've misunderstood what you're trying to say.

I thought there had been posters before who hadn't taken a DB at NPA and then discovered that once applied for it was paid from the date of application onwards but the period between NPA and date of application wasn't paid retrospectively.

Yes, I seem to recall the same thing.

fuzzything

Dazed_and_C0nfused said:

I thought there had been posters before who hadn't taken a DB at NPA and then discovered that once applied for it was paid from the date of application onwards but the period between NPA and date of application wasn't paid retrospectively.

Instead of backdating a pension not claimed at Normal Pension Age some DB schemes instead increase the pension benefits to reflect the late payment.

sheslookinhot

fuzzything said:

Dazed_and_C0nfused said:

I thought there had been posters before who hadn't taken a DB at NPA and then discovered that once applied for it was paid from the date of application onwards but the period between NPA and date of application wasn't paid retrospectively.

Instead of backdating a pension not claimed at Normal Pension Age some DB schemes instead increase the pension benefits to reflect the late payment.

Yes, my DB pension has a Late Retirement Factor (LRF) of 7.5% for each year after normal pension age.

xylophone

Instead of backdating a pension not claimed at Normal Pension Age some DB schemes instead increase the pension benefits to reflect the late payment.

And some schemes/sections of schemes do not offer late retirement increases.

I  seem to remember that this came up a few years back - the poster had had a  FS pension in the TPS (?)  deferred beyond age 60 - the arrears were paid as a lump sum (taxable) but no LRF was applied.

xylophone

I thought there had been posters before who hadn't taken a DB at NPA and then discovered that once applied for it was paid from the date of application onwards but the period between NPA and date of application wasn't paid retrospectively.

I think I remember posts on these lines.

Everything depends on the rules of the individual schemes - as I understand it, there were schemes which did not permit deferment beyond NRA.