If I don’t take a tax free lump sum…

ece9600

From my DC pension, can I drawdown with a tax free element? 

I also have a DB pension. Again, if I don’t take a tax free lump sum, can I pay lower tax on my income from it? 

Thanks. 

NoMore

Yes to the first question as long as your DC pension supports it, most modern ones will.

For your second question, no you can't reduce the tax due from the DB pension by using tax free availability in a DC pension.

Notepad_Phil

ece9600 said:

From my DC pension, can I drawdown with a tax free element? 

I also have a DB pension. Again, if I don’t take a tax free lump sum, can I pay lower tax on my income from it? 

Thanks. 

On every DB pension that I am aware of, then if not taking the tax free lump sum is an available option then you will receive a larger pension and hence more is potentially taxable - but that is not a reason in itself to take the tax free lump sum, it is usually much better to take no lump sum and receive a larger pension then it is to take a lump sum and smaller pension.

Marcon

Notepad_Phil said:

ece9600 said:

From my DC pension, can I drawdown with a tax free element? 

I also have a DB pension. Again, if I don’t take a tax free lump sum, can I pay lower tax on my income from it? 

Thanks. 

On every DB pension that I am aware of, then if not taking the tax free lump sum is an available option then you will receive a larger pension and hence more is potentially taxable - but that is not a reason in itself to take the tax free lump sum, it is usually much better to take no lump sum and receive a larger pension then it is to take a lump sum and smaller pension.

Not necessarily - there's no 'usually' about it given the huge number of variations in personal circumstances, tax situation etc (and of course the 'commutation rate' - how much tax free cash you'd get in exchange for each £1 of pension exchanged for cash).

QrizB

Notepad_Phil said:

On every DB pension that I am aware of, then if not taking the tax free lump sum is an available option then you will receive a larger pension...

Mine doesn't offer that. You get the compulsory lump sum, or you commute to get a bigger one. There's no reverse commutation.

And that isn't unusual. Some of the public service pensions are/were like that too.