TFLS when you have both a DB & DC

HighVoltage

I have both a DB & DC pension with a former employer, the pension company  have given me two options for taking these

1) take the DB pension and leave the DC pot as is to take later
2) take the DB pension with a £1k reduction per year and all of the DC pot (about 300k) as a TFLS

I don't need the TFLS, as currently working, no debts. I cannot contribute to the DC pot as have FP 2016

is it better to take the all the DC pot as a TFLS from a tax point of view now or just leave as is (since I don't need it) ?

BTW the £300k is what was quoted back in Jul, I've checked the value of it online and has dropped to £284k recently, so I assume this is what I will get if I do take it as a TFLS

Marcon

HighVoltage said:

I have both a DB & DC pension with a former employer, the pension company  have given me two options for taking these

1) take the DB pension and leave the DC pot as is to take later
2) take the DB pension with a £1k reduction per year and all of the DC pot (about 300k) as a TFLS

I don't need the TFLS, as currently working, no debts. I cannot contribute to the DC pot as have FP 2016

is it better to take the all the DC pot as a TFLS from a tax point of view now or just leave as is (since I don't need it) ?

BTW the £300k is what was quoted back in Jul, I've checked the value of it online and has dropped to £284k recently, so I assume this is what I will get if I do take it as a TFLS

What would you do with the cash if you do take the DC pot now? If you can take it all as cash, the value might go up again between now and when you do decide to take it. 

The value of your DC pot might interact with the level of reduction you'd get in the DB scheme, so if you do seriously consider scooping the DC pool, make sure you get an up to date quote from your scheme as to how (if at all) it could impact on the level of reduction in the DB arrangement.

HighVoltage said:

is it better to take the all the DC pot as a TFLS from a tax point of view now or just leave as is (since I don't need it) ?

Depends which tax you have in mind (?income or inheritance?), and how old you are (75 is a bit of milestone for pension savers!).  Given you have FP you might want to take some proper financial advice based on a full understanding of your situation, rather than relying on people who are responding to a post which provides only minimal information and thus can't realistically give you any sort of accurate answer.

Secret2ndAccount

First question: have you asked if you can defer taking the DB in exchange for a larger annual pension? Some private DB schemes do allow this. If you don't get an increased pension then it's unlikely to be a good move - just giving up money.
So, assuming you have to start the DB, it is normally a very good idea to use a linked DC as the TFLS. This is a one time chance to get all the DC out tax free, and it leaves you with a larger guaranteed monthly payout from the DB - a win-win. Otherwise you are going to pay tax on 3/4 of the DC pot. Looks like you have a decent pension so you could even pay 40% tax on some of it.

The only problem you are left with is what to do with 300k of cash. There are savings accounts available now that pay over 4%. You can put 20k per year into an ISA and reinvest it in stocks tax free. You can also invest in stocks or bonds outside an ISA. Your first 2k of dividends, and 12k of growth every year can be had without paying any tax. Of course, that takes some management which you may or may not wish to deal with. You can pay an adviser to handle it for you, but expect to pay him in the 1,000's every year for his trouble. You may view it as worth it.

Have you considered retiring? Have you figured out how much you need every year, and how much you can get every year based on your DB, your State Pension, and at least 300k in other funds?

Also, are you aware of the Lifetime Allowance?