Pension q

esthomizzy

Can someone with a DB scheme and a SIPP take no tax free cash (pcls) from the DB scheme (where scheme rules permit) and instead take 25% of entire combined nominal pots (assuming not breaching LTA) from only SIPP to preserve guaranteed benefits or do you have to keep separate and only take 25% from SIPP? If no can you take more if you transfer in to the DC element of the employer scheme (where existing) instead?

benjaminfabi

Hi,

You can't take more than 25% of the value of a DC fund as a PCLS (unless you have transitional protection).

Some DB schemes have additional voluntary contributions (AVC) schemes (which are DC). Some of these DB schemes will allow a member to take the all available PCLS (DB and AVC) from the AVC, to preserve the DB income as you describe. Some may allow transfers in, but these will be rare.

In all cases, the maximum PCLS you can take is limited to 25% of the available lifetime allowance.

The commutation factor of the DB scheme will help to determine whether it is better to take PCLS from the DB or DC funds. The higher the commutation factor, the more attractive the PCLS from the DB scheme. I work to a CF of 20 as a rough rule of thumb.

esthomizzy

Thanks