Bridging the gap to state pension.

Maud_Dakota

Hi, I have recently given up work at 55 and will start taking my DB pension from April 26. This will provide some of my monthly income and I will then need to top up from savings (this includes my TFLS from the DB pension) or one of 2 DC pensions I have. These have not yet been touched.

The DB pension will not use all of my tax allowance each year (probably around £3k allowance left) so my question is, should I take out of my taxable part of my DC pension to maximise this allowance, or use savings and leave the DC pensions to grow? Or something else all together?

The two DC pensions are currently worth £21k and £75k.

I'm at the stage where I have read so much that I am now confused which is the best option to move forward with. :-/

Thanks

HedgehogRulez

yes, you should always try to maximise your personal allowance each year. you can invest any excess funds outside a pension (e.g. ISAs, GIA)

molerat

Take £3600 out of a pension, put £2880 back into a pension, taxman grosses up to £3600 so you end up with £3600 in a pension and £720 in your pocket.

DE_612183

Not sure you can take out the taxable part of your DC pensions - you may have to also take out the 25% tax free element ( although you can probably recycle some of that )

molerat

Any possibility of taking advantage of marriage allowance, either giving or receiving ?

kipsterno1

Have you worked out how much you need to live on?

Maud_Dakota

https://forums.moneysavingexpert.com/discussion/comment/81868210#Comment_81868210

Yes I’ve worked all that out before making the decision to give up work. 😊

Maud_Dakota

Hi, no I’m not married.

Maud_Dakota

Yes that’s something I’d thought about too. I was of the understanding that the tax free element was best left in the pension unless it was needed for something else. That’s one of the reasons I’m looking at all options or combination of options.

p00hsticks

AS far as I'm aware you can't just take the taxable part of a DC pension out and leave the whole of the tax free part in it.

What you can do - assuming you have £3k spare allowance not used after your DB income - is take out £4k a year, of which £3k would be taxable (but make use of your remaining allowance) and £1k would be tax free,

squirrelpie

What you can do - assuming you have £3k spare allowance not used after your DB income - is take out £4k a year, of which £3k would be taxable (but make use of your remaining allowance) and £1k would be tax free,

The buzz word for this is UFPLS (Uncrystallised Funds Pension Lump Sum) where you take both the tax free part and the corresponding taxable part.