Drawing down Defined Benefits pension and paying into Defined contribution scheme

Cobbler_tone

I have been wrestling with this option for some time (a google hit lead to this thread!) and could access by deferred DB scheme now and have the option to load into a DC via salary sacrifice. 
There is RPI protection on the DB scheme of 2.5% to 5% split 50/50 across the years. I can also see accurate numbers on how my DB is impacted by the reduction of taking it early. I am aware that spousal provision of 50% is calculated once it moves into payment. I am 55.

Today DB:            annual £15,197 with TFLS of £101,314
12 months today: annual £16,458 with TFLS of £109,718
24 months today: annual £17,631 with TFLS of £117,538  (I'll be 58 in this year and either packing up or reducing right down)

It would give me scope to increase sacrifice into my DC from £23k-c45k a year and still have plenty of net money. It would keep my total taxable income below the 40% level and above minimum wage.

There is no future worries around hitting 40% brackets in retirement.
Maybe it is a low risk marginal loss/gain. Maybe I am overthinking it and it is just because it is accessible and it would ramp up my DC pot. Perhaps it is a stupid, ill informed suggestion! 

....and yes I would take the TFLS and will invest it, keeping the flexibility to use it.

bjorn_toby_wilde

Cobbler_tone said:

I have been wrestling with this option for some time (a google hit lead to this thread!) and could access by deferred DB scheme now and have the option to load into a DC via salary sacrifice. 
There is RPI protection on the DB scheme of 2.5% to 5% split 50/50 across the years. I can also see accurate numbers on how my DB is impacted by the reduction of taking it early. I am aware that spousal provision of 50% is calculated once it moves into payment. I am 55.

Today DB:            annual £15,197 with TFLS of £101,314
12 months today: annual £16,458 with TFLS of £109,718
24 months today: annual £17,631 with TFLS of £117,538  (I'll be 58 in this year and either packing up or reducing right down)

It would give me scope to increase sacrifice into my DC from £23k-c45k a year and still have plenty of net money. It would keep my total taxable income below the 40% level and above minimum wage.

There is no future worries around hitting 40% brackets in retirement.
Maybe it is a low risk marginal loss/gain. Maybe I am overthinking it and it is just because it is accessible and it would ramp up my DC pot. Perhaps it is a stupid, ill informed suggestion! 

....and yes I would take the TFLS and will invest it, keeping the flexibility to use it.

Quite a hefty reduction for taking it early (if my maths is correct) 14% roughly for two years.  That seems a bit more punitive than some, although maybe that’s because you’re well below the NRA. I believe a range of 3.5-5% is more common.

It would take you and your spouse a couple of years to get the PCLS into ISAs so there would be tax implications. It’s a tricky decision but if it fits with your goals, why not?

I’m trying to work out the best time to take one of mine and it’s not an easy decision to navigate.

Cobbler_tone

bjorn_toby_wilde said:

Cobbler_tone said:

I have been wrestling with this option for some time (a google hit lead to this thread!) and could access by deferred DB scheme now and have the option to load into a DC via salary sacrifice. 
There is RPI protection on the DB scheme of 2.5% to 5% split 50/50 across the years. I can also see accurate numbers on how my DB is impacted by the reduction of taking it early. I am aware that spousal provision of 50% is calculated once it moves into payment. I am 55.

Today DB:            annual £15,197 with TFLS of £101,314
12 months today: annual £16,458 with TFLS of £109,718
24 months today: annual £17,631 with TFLS of £117,538  (I'll be 58 in this year and either packing up or reducing right down)

It would give me scope to increase sacrifice into my DC from £23k-c45k a year and still have plenty of net money. It would keep my total taxable income below the 40% level and above minimum wage.

There is no future worries around hitting 40% brackets in retirement.
Maybe it is a low risk marginal loss/gain. Maybe I am overthinking it and it is just because it is accessible and it would ramp up my DC pot. Perhaps it is a stupid, ill informed suggestion! 

....and yes I would take the TFLS and will invest it, keeping the flexibility to use it.

Quite a hefty reduction for taking it early (if my maths is correct) 14% roughly for two years.  That seems a bit more punitive than some, although maybe that’s because you’re well below the NRA. I believe a range of 3.5-5% is more common.

It would take you and your spouse a couple of years to get the PCLS into ISAs so there would be tax implications. It’s a tricky decision but if it fits with your goals, why not?

I’m trying to work out the best time to take one of mine and it’s not an easy decision to navigate.

Thanks. I did crunch some more numbers. You have to factor in the loss of growth compounded. So although you save some marginal tax (by offsetting), you also lose (in this example) quite a lump of tax free cash. I’ve come to the conclusion it is best to leave alone until at least work retirement, whilst maximising contributions to the DC based on affordability.

MissymooMaxMylo

Hello. Is there anybody that can give me financial advice about a defined benefit pension of less than £20k that I wish to transfer to my Scottish Widows company pension. I have tried Unbiased several times but cannot find anyone to help. I believe financial advice is required by law if the defined benefit pension is over £30k but Scottish Widows have their own rules and will not allow the transfer without me first seeking financial advice. Happy to pay for advice if there is anyone who can give me some. Thanks 

hyubh

MissymooMaxMylo said:

 I believe financial advice is required by law if the defined benefit pension is over £30k but Scottish Widows have their own rules and will not allow the transfer without me first seeking financial advice. Happy to pay for advice if there is anyone who can give me some. Thanks 

You have a statutory right to a CETV, and the advice requirement only applies if it's over £30K. Whether the receiving scheme will accept the transfer without advice is up to them.

DE_612183

MissymooMaxMylo said:

Hello. Is there anybody that can give me financial advice about a defined benefit pension of less than £20k that I wish to transfer to my Scottish Widows company pension. I have tried Unbiased several times but cannot find anyone to help. I believe financial advice is required by law if the defined benefit pension is over £30k but Scottish Widows have their own rules and will not allow the transfer without me first seeking financial advice. Happy to pay for advice if there is anyone who can give me some. Thanks 

You need to start your own thread so answers don't get confused - but the simple answer is you need to get an IFA.