Pension advice needed please!

Wooly_Mammoth

I hope someone can help me.

Im in the enviable position of having an old defined contribution pension and a live defined benefit pension with the NHS.

I would like to use the defined contribution pension to settle some debts and lend it to my daughter for a house deposit.

If I was to cash in the old pension in total, would it affect the defined benefit pension?

Keep_pedalling

I will let others answer the pension questions, but no mortgage provided is going to accept a loan as a deposit.

How old are you?

Wooly_Mammoth

It will be a "gift" which she will pay back slowly. I am 55.

tacpot12

Cashing in your old DC pension will use some of your Lump Sum Allowance. This will reduce the amount of tax free cash you can take from your NHS pension, but the Lump Sum Allowance is £268,275 which means you would have to be entitled to very large lump sum (and therefore pension) from the NHS before it had any effect.

Wooly_Mammoth

Oh the one i want to cash in is only 65k. My NHS one is worth much more, but i dont want to touch that or impact any employer contributions.

Wooly_Mammoth

Saying that it wouldnt generate a lump sum of that amount. 

xylophone

If you are asking about the Money Purchase Annual Allowance,  taking a DC pension does not affect your ability to contribute to your DB pension.

Your DC provider is likely to ask  whether you have had a Pension Wise appointment.

https://www.moneyhelper.org.uk/en/pensions-and-retirement/pension-wise/book-a-free-pension-wise-appointment

If you take the DC pension, 25% will be tax free, the balance taxable as income in the tax year of receipt.

The pension provider will deduct tax before paying the money but at an emergency rate - see

https://adviser.royallondon.com/technical-central/pensions/case-studies/emergency-rate-income-tax/

It will be a "gift" which she will pay back slowly. I am 55.

Then she will not be able to sign a declaration that the money used for the deposit is a gift?

Wooly_Mammoth

good point

Wooly_Mammoth

ive booked a pension wise appointment, thank you!

Brie

Double check that cashing the DC pension doesn't restrict your future contributions to the DB scheme.  I know it used to be that if you took drawdown from an old DC your future contributions to a current DC pension would be limited to £4k tax free but I don't know if/how that would be figured for a current DB pension.

Careful too if you do "gift" money to your daughter as that might be considered deprivation of assets should you need local council assistance with your care eventually.  Granted it sounds like it would hopefully be a long time in to the future and if your daughter does eventually pay everything back there obviously wouldn't be an issue.   

p00hsticks

Wooly_Mammoth said:

It will be a "gift" which she will pay back slowly. I am 55.

A bit of a contradiction in terms, and one I don't think a mortgage provider would be happy with.  
A "gift" doesn't need paying back , a "loan' does.