The small pots regime
I would like to better understand the small pots regime if anybody could kindly explain this rule to me please or perhaps post a link that I can read. I have tried to look up how it can be applied but I’m still not sure. I should add that @Marcon has recently very helpfully replied to somebody’s post and my understanding is much better but if I could post my questions and share my retirement forecasts.
My forecast retirement income:
DB scheme 1 (from previous employer) - intend to take as 100% pension (i.e. not take the tax free lump sum)
DC scheme (the subject of my query and currently worth c.£12k and I am no longer paying into it) (from another previous employer and did not work there very long) - this is continuing to grow each year (not received the performance for this year yet though!)
DB scheme 2 (current employer) - contributing to and intend to take as 100% pension
LGPS AVC contributions via salary sacrifice (current employer) - I have only just begun contributing to this but will continue throughout the rest of my career whilst working for this employer and intend to ensure I never pay 40% tax.
I have created a spreadsheet and I forecast and monitor the size of my AVC contributions pot and I also include 20 x the forecast DB schemes to ensure I am never forecast to exceed the lifetime allowance (unlikely but you never know what the future holds).
This brings me to my question. Would I be able to take the pot of money I have in the DC scheme via the small pots regime so that it does not count towards my lifetime allowance?
I believe I can take three amounts each of £10k or less (including taking them in the same year) and this will not count towards my lifetime allowance and this will not trigger a crystallisation. Is that correct?
Am I also correct in thinking I would not pay tax on this money if taken via the small pots regime?
The amount is relatively small at currently only £12k but with another 12 to 14 years until I am likely to retire it will hopefully continue to grow.
For the purpose of helping me to understand the small pots regime let’s say my understanding is correct and you can take three pots of £10k each what are you allowed to do with what is remaining. Say for example, my DC pot is worth £45k and I take £10k out on three separate occasions there will be £15k left. Then only the remaining £15k would count towards my LTA and I presume could be taken as a small pension or 25% tax free lump sum with the rest as a pension?
Thank you for your help.