Thoughts on PCLS or bigger payments??

DRS1

i have checked my DB pension scheme and there is no mention of needing to be married to the spouse upon commencement of the pension. 

@Marcon will correct me but I don't think this sort of detail is usually included in the member's booklet.  You may need to dig around in the scheme rules to be sure.

Triumph13

I agree that the PCLS at a factor of 23x does look attractive when you add in the impact of 40% tax.  I therefore suggest you look at the intermediate option where you take approximately £93k of PCLS, not the full £123k. 

The reason for not taking the whole £123k is simply that the last £30k isn't really tax free.  You already have £700k x 25% = £175k you can take from your DC scheme, so only another £93k available before you hit the limit.  Any further PCLS you take from the DB just means you pay tax on an equivalent amount of the DC.

Cobbler_tone

DRS1 said:

i have checked my DB pension scheme and there is no mention of needing to be married to the spouse upon commencement of the pension. 

@Marcon will correct me but I don't think this sort of detail is usually included in the member's booklet.  You may need to dig around in the scheme rules to be sure.

We have a very good scheme booklet, which covers a lot of detail, including things like long term partners and age differences (-10 plus) impacting the levels of potential spousal pension.
There is an over arching caveat, although as you don't necessarily need to be married (on ours) it probably takes this particular issue out of the equation. I can imagine this would be a monster document to try and pick through:

MetaPhysical

Triumph13 said:

I agree that the PCLS at a factor of 23x does look attractive when you add in the impact of 40% tax.  I therefore suggest you look at the intermediate option where you take approximately £93k of PCLS, not the full £123k. 

The reason for not taking the whole £123k is simply that the last £30k isn't really tax free.  You already have £700k x 25% = £175k you can take from your DC scheme, so only another £93k available before you hit the limit.  Any further PCLS you take from the DB just means you pay tax on an equivalent amount of the DC.

Thank you, great minds think alike.  I had come to the same conclusion crunching through the numbers.  Or I could take the full amount from the DB and then lesser amount from the DC, it's swings and roundabouts, either way will leave more available for UFPLS.