Transfering my DB pension to a SIPP
username12345678
Posts: 281 Forumite
Hi,
I've searched through the pension forum and already picked up some really useful information about transferring out of a DB and in to a SIPP.
I'm considering it myself and i'm going to arrange a meeting with an IFA to discuss my circumstances but if you guys/girls with a good handle on it could cast a quick eye over my situation and give me an initial assessment i'd really appreciate it.
Age:44
CETV: £1.36m
Preferred retirement age: 55
Estimate annual drawdown: £40-50k pa
I've started looking at the links for withdrawal rates etc on the 'Drawdown' thread but if you could give me a steer on some of the things that i've thought about...
1. Is my drawdown requirement reasonable against the pot size given average life expectancy?
2. I would want to keep risk to an absolute minimum to achieve the above - but what would that risk look like?
3. I've got headroom on my LTA - should I keep paying in to the SIPP after transfer?
4. What questions is the IFA going to want answers to?
Thanks in advance!
I've searched through the pension forum and already picked up some really useful information about transferring out of a DB and in to a SIPP.
I'm considering it myself and i'm going to arrange a meeting with an IFA to discuss my circumstances but if you guys/girls with a good handle on it could cast a quick eye over my situation and give me an initial assessment i'd really appreciate it.
Age:44
CETV: £1.36m
Preferred retirement age: 55
Estimate annual drawdown: £40-50k pa
I've started looking at the links for withdrawal rates etc on the 'Drawdown' thread but if you could give me a steer on some of the things that i've thought about...
1. Is my drawdown requirement reasonable against the pot size given average life expectancy?
2. I would want to keep risk to an absolute minimum to achieve the above - but what would that risk look like?
3. I've got headroom on my LTA - should I keep paying in to the SIPP after transfer?
4. What questions is the IFA going to want answers to?
Thanks in advance!
0
Comments
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Don't you need to provide what the DB would be per annum? If it's £50k then it looks a bad idea. If it's £5k then it's probably a better idea0
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My forecast for retirement at age 60:
Lump sum: £250,000
Annual: £55,000
I would be looking at leaving 5 years before so i'm not sure what the figures would look like at that point.0 -
If you have fixed protection then you can't continue to pay into a pension.If you don't have fixed protection ( and I asume you don't) then by taking the CETV you will be £360k over from day 1 and you will need to apply the 55% tax to that surplus when calculating whether to proceed or not.0
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I haven't got fixed protection (or the other option?).
I'm around £745,000 on my LTA.0 -
username12345678 wrote: »I haven't got fixed protection (or the other option?).
I'm around £745,000 on my LTA.
You are benefitting from the fact that the LTA calculation undervalues a DB scheme.If or when you tranfer out of the DB scheme then the LTA calculation is based on the actual amount in your pot,which as per my previous post would be considerably over the current lifetime allowance0 -
You are benefitting from the fact that the LTA calculation undervalues a DB scheme.If or when you tranfer out of the DB scheme then the LTA calculation is based on the actual amount in your pot,which as per my previous post would be considerably over the current lifetime allowance
That's come as a bit of a surprise.
I'd assumed it was the LTA not the CETV that was subject to the cap and taxation for surplus.
Totally changes the numbers I think!0 -
Totally changes the numbers I think!
it does significantly as you are already through the lifetime allowance band (on current value) with years to go if you were to transfer. Whereas not with the DB scheme.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
it does significantly as you are already through the lifetime allowance band (on current value) with years to go if you were to transfer. Whereas not with the DB scheme.
Can I clarify this LTA point so i'm sure I understand;
The LTA isn't a function of contributions - it is calculated through size of fund?
Could someone on a DC scheme theoretically invest £50,000 in Company A, see the share price go up 20 times in 6 months (I know), and then find that's it for their LTA?
And if that's the case why is the Annual Allowance structured the way it is?0 -
The LTA is a bit of an anomaly. It is a tax on success and makes little sense with an annual allowance in place. However, there are legacy issues that it mainly still exists for.Could someone on a DC scheme theoretically invest £50,000 in Company A, see the share price go up 20 times in 6 months (I know), and then find that's it for their LTA?
Yes. And yet the same person could invest badly and end up with 10 times in 6 months (i know that too) and would be below the limit.And if that's the case why is the Annual Allowance structured the way it is?
it was to combat the abuse of the system for firms paying off directors by putting the bulk of their golden handshake into the pension. It was then seen as a source of revenue in the bash-a-banker days when anyone earning over £50k or had larger amounts was seen as an easy target.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
Thanks for the explanation dunstonh - even if it wasn't exactly what I wanted to read.
So my starting point for whatever calculations I need to do is c£1,170,000.0
This discussion has been closed.
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