Ongoing tax free amount.

roddy.mcaskill

Via my long term employer I have a dc pension pot and a db pension. 

My employer advises that when I come to take my pension my tax free allowance is ((20xDB) + DC) * xx% with any TFLS being paid from the DC pot, thereby leaving my DB pension paying out the max possible. 

My question is if I only take say 10% TFLS at retirement what values would be used for calculating future TFLS allowance?

let’s say I have 400000 DB (20x£20k) and 400000 dc fund. That means if I take full 25% now I would get £200k. Thereafter my dc fund which would then be in drawdown would be worth 200k and my dc pension would payout £20k per year. 

If I take a lower percentage what variables are used to calculate the “fund size”? Assume that db pension grows at rate of inflation and that the dc find enjoys at least some growth!

sheslookinhot

I don’t think you can take 200k from your DC pension. Each pension will be considered separately. 100k from both. Additionally, your DB scheme determines what your max. TFLS will be.

Dazed_and_C0nfused

Isn't it determined at the beginning for this linked DC pension?

Any separate DC fund will have its 25% TFLS which won't be impacted by what happens to the DB/DC linked one.  I think.

Linton

With many, but I dont think all, DB schemes if you take the DB and DC parts together all the tax free lump sum can be taken from the DC part, assuming there is enough money in it.  But I do not belleve that you can take part payments - you will have to check your scheme rules.

PS perhaps you could transfer out part of your DC pension to a personal pension and take it separately - again check what your scheme permits.

Secret2ndAccount

Think of it as a DB pension. You get a one time chance to take a tax free lump sum, and a one-time chance to use the linked DC to pay for it. After that, all withdrawals are taxable. 
As Linton says, transfer out the part of the linked DC pot that you won't need to pay the TFLS. Do that before you take the DB pension and the lump sum. Your aim is to leave the size of the DC so that it just pays the 25% TFLS on the big pension. This way you preserve the 25% TFLS on the unspent DC pot.
Read your scheme rulebook, but I think this is what it will say.