Pension advice needed please!

xylophone

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.

https://www.moneyhelper.org.uk/en/pensions-and-retirement/tax-and-pensions/money-purchase-annual-allowance-mpaa

 But if you trigger the MPAA, this reduces to £10,000 a year.

The MPAA only applies to contributions to defined contribution pensions and not defined benefit pension schemes.

The OP proposes continuing to contribute to a DB pension after taking taxable benefits from a DC pension so is not affected by 

MPAA.

dunstonh

Wooly_Mammoth said:

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

That is not a gift in the lender's eyes. Indeed, some will get you to sign a declaration confirming it is a gift and not a loan and will emphasise that she does not need to pay it back.

Albermarle

Wooly_Mammoth said:

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

£65 K would give you £16,250 tax free amount and £48, 750 taxable income. This will be added to your taxable income from your employment, so may well push you into the 40% tax bracket, if you are not already there.
You may wish to consider just taking the tax free amount, and a lesser taxable amount this tax year, and the rest in following tax years.

As mentioned in a previous post, you will probably find that even more tax is taken initially as it is a  one off payment. However any overpayment of tax can be reclaimed quite easily. The problem is more what I have said in the first paragraph.

Sarahspangles

Wooly_Mammoth said:

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?

If you haven’t already, check what your State Pension forecast says you will be entitled to. Lots of people paid less into the old State Pension (called ‘contracting out’) because they had a workplace pension. When it comes to retirement, their State Pension may be reduced as a result. I’m mentioning this because there are lots of people asking questions on this forum about why they don't qualify for a full State Pension, when the difference is ‘there’ in their workplace pension. You may need your DC pension for this reason.

Keep_pedalling

Wooly_Mammoth said:

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

Gifts are absolute and do not get paid back. The lender will require you to declare that this is a gift, saying it is when it is really a loan is mortgage fraud. 

thriftytracey

Wouldn't she have to declare the family loan as a future outgoing?  So she may not get a mortgage.

dunstonh

thriftytracey said:

Wouldn't she have to declare the family loan as a future outgoing?  So she may not get a mortgage.

It would reduce affordability and lender choice.   

barnstar2077

Maybe things are different now, but when I took out my mortgage there were no questions about where my deposit came from, I put ten percent down and that was it.  Even if they did ask and you said savings it wouldn't be a lie, as once you gave her the money it would become part of her savings.  A bit of a mountain out of a mole hill imo.

Wooly_Mammoth

Thanks all will bear it in mind! I do appreciate all angles for this. 

jimjames

barnstar2077 said:

Maybe things are different now, but when I took out my mortgage there were no questions about where my deposit came from, I put ten percent down and that was it.  Even if they did ask and you said savings it wouldn't be a lie, as once you gave her the money it would become part of her savings.  A bit of a mountain out of a mole hill imo.

Things are very different now