Partial retirement limits on PP investment

iwblue

I’m looking at taking partial retirement in about 12 months and don’t know how this will affect the amount of money I can pay into my PP.  I’ll be taking (partially) my works pension which is a DB one.  My DB pension will pay me a Tax Free lump sum,

 

Does this mean I’ll be restricted to how much money I can pay into my PP?

Is it about £4000 PA?

 

I’ve got some savings, approx, 20K, which I’m thinking will be better off in my PP as I’ll have the TF lump sum coming to me when I take partial retirement.

 

My PP is invested in Legal and General Multi Index 5 Fund acc.

 

As this money will have to last me, I’m thinking to invest the 20K in something less risky.

 

Am I missing anything here, regarding investing my savings rather than in interest accounts which are getting about 4% overall?

 

Thanks in advance

molerat

Are you sure you can "partially" access your DB scheme, usually they are all or nothing.

Taking a DB pension does not trigger the MPAA, only accessing taxable amounts from a DC scheme does that.

Albermarle

iwblue said:

I’m looking at taking partial retirement in about 12 months and don’t know how this will affect the amount of money I can pay into my PP.  I’ll be taking (partially) my works pension which is a DB one.  My DB pension will pay me a Tax Free lump sum, Unusual to be able to partly take a DB pension?

 

Does this mean I’ll be restricted to how much money I can pay into my PP?

Is it about £4000 PA? Taking a DB does not trigger this limit.

 

I’ve got some savings, approx, 20K, which I’m thinking will be better off in my PP as I’ll have the TF lump sum coming to me when I take partial retirement.

 

My PP is invested in Legal and General Multi Index 5 Fund acc. A medium risk fund

 

As this money will have to last me, I’m thinking to invest the 20K in something less risky. The longer the pot has to last, then it is better not to tone down the risk too much. 

 

Am I missing anything here, regarding investing my savings rather than in interest accounts which are getting about 4% overall? Having some cash savings is useful for unexpected expenditure and for some peace of mind. Investments are normally better for the long term, but can go up and down . A mixture of both is normal.

 

Thanks in advance

Regarding the last point it is down to personal choice. More cautious types prefer to have more cash, but in the long run  cash will usually lose out to inflation, where investments should not. 

xylophone

Does this mean I’ll be restricted to how much money I can pay into my PP?

Taking a DB pension does not trigger the MPAA.

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

iwblue

molerat said:

Are you sure you can "partially" access your DBmolerat said:

Are you sure you can "partially" access your DB scheme, usually they are all or nothing.

Taking a DB pension does not trigger the MPAA, only accessing taxable amounts from a DC scheme does that.

 scheme, usually they are all or nothing.

Taking a DB pension does not trigger the MPAA, only accessing taxable amounts from a DC scheme does that.

Well, I'm reducing the number of hours I work, they call it partial, however I think it triggers the whole pension. I can't earn more than ifvi was working full time, so anything above that is abated...if that makes sense

iwblue

This has got me thinking, I'll get £50k tax free payment from my DB soon, so I'll have 70k. Can I pay this into my PP and get the tax rebate of £14k into my PP?
And then take the 25% tax free element from the PP?
TIA

Dazed_and_C0nfused

iwblue said:

This has got me thinking, I'll get £50k tax free payment from my DB soon, so I'll have 70k. Can I pay this into my PP and get the tax rebate of £14k into my PP?
And then take the 25% tax free element from the PP?
TIA

How much do you think your P60 will show your taxable earnings to be?

iwblue

About 40k the year preceding getting the tax free payment