DB pension - if you DON’T take TFLS, do the annual payments have a 25% tax free component?

JDK1971

As above really.  If you decide not to take the 25%TFLS from a DB pension scheme, are the payments you receive on a monthly basis paid 25% tax free (similar to drawdown on a DC scheme where you haven’t taken the TFLS)?

Thanks.

Dazed_and_C0nfused

JDK1971 said:

As above really.  If you decide not to take the 25%TFLS from a DB pension scheme, are the payments you receive on a monthly basis paid 25% tax free (similar to drawdown on a DC scheme where you haven’t taken the TFLS)?

Thanks.

With a DB pension you don't get a 25% TFLS in the same way you do with a DC pension.

You get a (tax free) PCLS based on the scheme rules.

The pension payments, including any inverse commutation, are all taxable.

Marcon

JDK1971 said:

As above really.  If you decide not to take the 25%TFLS from a DB pension scheme, are the payments you receive on a monthly basis paid 25% tax free (similar to drawdown on a DC scheme where you haven’t taken the TFLS)?

Thanks.

You get one chance to take tax free cash from a DB scheme, at the time you start to draw your DB pension. It's 25% for some schemes, but not always - the scheme rules will give the necessary information on the maximum tax free cash you can take.

From then on, your regular DB pension payments are taxable at your marginal rate.

westv

Marcon said:

JDK1971 said:

As above really.  If you decide not to take the 25%TFLS from a DB pension scheme, are the payments you receive on a monthly basis paid 25% tax free (similar to drawdown on a DC scheme where you haven’t taken the TFLS)?

Thanks.

You get one chance to take tax free cash from a DB scheme, at the time you start to draw your DB pension. It's 25% for some schemes, but not always - the scheme rules will give the necessary information on the maximum tax free cash you can take.

From then on, your regular DB pension payments are taxable at your marginal rate.

25%? You mean 3 x annual income??

p00hsticks

westv said:

Marcon said:

JDK1971 said:

As above really.  If you decide not to take the 25%TFLS from a DB pension scheme, are the payments you receive on a monthly basis paid 25% tax free (similar to drawdown on a DC scheme where you haven’t taken the TFLS)?

Thanks.

You get one chance to take tax free cash from a DB scheme, at the time you start to draw your DB pension. It's 25% for some schemes, but not always - the scheme rules will give the necessary information on the maximum tax free cash you can take.

From then on, your regular DB pension payments are taxable at your marginal rate.

25%? You mean 3 x annual income??

It's whatever the particular scheme allows - there's no set rule 

westv

p00hsticks said:

westv said:

Marcon said:

JDK1971 said:

As above really.  If you decide not to take the 25%TFLS from a DB pension scheme, are the payments you receive on a monthly basis paid 25% tax free (similar to drawdown on a DC scheme where you haven’t taken the TFLS)?

Thanks.

You get one chance to take tax free cash from a DB scheme, at the time you start to draw your DB pension. It's 25% for some schemes, but not always - the scheme rules will give the necessary information on the maximum tax free cash you can take.

From then on, your regular DB pension payments are taxable at your marginal rate.

25%? You mean 3 x annual income??

It's whatever the particular scheme allows - there's no set rule 

Yes, that point has already been made in the post I was responding to.
But it can't be 25% in a DB scheme as there is nothing to take 25% of.

sammyjammy

A DB lump sum can still be 25% of something, last salary for example.  Some DB schemes have no automatic lump sum.

Sarahspangles

westv said:

p00hsticks said:

westv said:

Marcon said:

JDK1971 said:

As above really.  If you decide not to take the 25%TFLS from a DB pension scheme, are the payments you receive on a monthly basis paid 25% tax free (similar to drawdown on a DC scheme where you haven’t taken the TFLS)?

Thanks.

You get one chance to take tax free cash from a DB scheme, at the time you start to draw your DB pension. It's 25% for some schemes, but not always - the scheme rules will give the necessary information on the maximum tax free cash you can take.

From then on, your regular DB pension payments are taxable at your marginal rate.

25%? You mean 3 x annual income??

It's whatever the particular scheme allows - there's no set rule 

Yes, that point has already been made in the post I was responding to.
But it can't be 25% in a DB scheme as there is nothing to take 25% of.

It’s 25% where an individual is offered a trivial commutation lump sum for their DB pension.

With a larger pension, if the individual opts to commute some DB pension to add to their PCLS, within their scheme rules, then that is capped at 25% of a figure calculated by working back from their annual pension.

There is a way of putting a nominal value on the pension, it’s just funded differently by the provider.

hyubh

westv said:

p00hsticks said:

westv said:

Marcon said:

JDK1971 said:

As above really.  If you decide not to take the 25%TFLS from a DB pension scheme, are the payments you receive on a monthly basis paid 25% tax free (similar to drawdown on a DC scheme where you haven’t taken the TFLS)?

Thanks.

You get one chance to take tax free cash from a DB scheme, at the time you start to draw your DB pension. It's 25% for some schemes, but not always - the scheme rules will give the necessary information on the maximum tax free cash you can take.

From then on, your regular DB pension payments are taxable at your marginal rate.

25%? You mean 3 x annual income??

It's whatever the particular scheme allows - there's no set rule 

Yes, that point has already been made in the post I was responding to.
But it can't be 25% in a DB scheme as there is nothing to take 25% of.

Oh dear, not this again... Do you think a DB scheme could hypothetically allow all benefits being taken as a PCLS? How do you think the LTA worked for DB schemes? What do you think public sector scheme rules say about maximum lump sums...?

Phossy

To answer the original question - No.

Marcon

westv said:

p00hsticks said:

westv said:

Marcon said:

JDK1971 said:

As above really.  If you decide not to take the 25%TFLS from a DB pension scheme, are the payments you receive on a monthly basis paid 25% tax free (similar to drawdown on a DC scheme where you haven’t taken the TFLS)?

Thanks.

You get one chance to take tax free cash from a DB scheme, at the time you start to draw your DB pension. It's 25% for some schemes, but not always - the scheme rules will give the necessary information on the maximum tax free cash you can take.

From then on, your regular DB pension payments are taxable at your marginal rate.

25%? You mean 3 x annual income??

It's whatever the particular scheme allows - there's no set rule 

Yes, that point has already been made in the post I was responding to.
But it can't be 25% in a DB scheme as there is nothing to take 25% of.

@westv Yes there is. Some DB schemes offer 25% using the capital value of someone's scheme benefits. Other schemes offer some sort of multiple of the annual pension. All comes down to the rules of a particular scheme, subject to overall limits imposed by legislation.