Increasing DC Pension Contributions

londoner62

I am due to start receiving 2 DB pensions in January totalling approximately £240 after 20% tax is deducted.

Am I allowed to increase my workplace DC payments from 16.5% to 25% from January (although I am thinking from my December pay-packet)? This would mean I have cumulatively the same net income whilst boosting my current workplace DC pension.

Any and all help gratefully received,

Paul

londoner62

https://forums.moneysavingexpert.com/discussion/6687643/increasing-dc-pension-contributions

For clarity, I am wondering if this in any way breaches the recycling rules.

DRS1

Maye this will help?

Recycling of tax-free cash & pension recycling rules - Royal London for advisers

Marcon

https://forums.moneysavingexpert.com/discussion/6687643/increasing-dc-pension-contributions

Given the figures, it's highly unlikely you have an issue, but could you just confirm the amount of any tax free lump sum you'll be taking from your 2 DB pensions when they come into payment?

londoner62

https://forums.moneysavingexpert.com/discussion/comment/82176409#Comment_82176409

£9,500 from one and £14,000 from the other. Might not be the largest, but I'm happy with my lot

Isthisforreal99

And what will the total of your and your employera contributions be? You have triggered the MPAA by taking taxable sums from your DC pension so the max you and your employer can contribute will be £10,000.

snowlaser

https://forums.moneysavingexpert.com/discussion/comment/82176613#Comment_82176613

The poster says they have drawn from DB, not DC

Isthisforreal99

https://forums.moneysavingexpert.com/discussion/comment/82176621#Comment_82176621

Ah, missed that vital part. Ignore me then

DRS1

https://forums.moneysavingexpert.com/discussion/comment/82176502#Comment_82176502

Sounds like you get a Yes to box 2 of the Royal London checklist. Maybe the later boxes trigger a No though?

londoner62

https://forums.moneysavingexpert.com/discussion/comment/82176827#Comment_82176827

My current contribution is £387 per month.

As I am thinking about lifting my contributions by £200 and my tax free lumps total £23,900, I think box 2 in the list above says I am good to go as I am only using the equivalent of 10% of my lump sums.

In any case, the £200 would be coming from wages and my net income would be 'subsidised' by the £230+ post tax income from the monthly DB payments.

Are there any qualified dissenters to my reasoning?

DRS1

People more clued up on this than me will know how the 5 year period and the measurement of the increased contributions over the 5 year period works. It is not just how does this year compare to last year and it is not just what are the extra contributions over a single year (at least I don't think so).

But of course recycling is one of those things you don't hear people have been caught out by - an awful lot of people do increase their contributions as they get closer to retirement. It is not as if you have just turned around and stuffed £23k back into a pension.