Draw DB Pension & Open 2nd DC Pension

[YeeWo]

Some of my colleagues (55+ yo) are drawing their DB pension accrued over decades of service. They remain working, the company is obliged to offer them access to another DC scheme! Any Tax Free Lump Sums can be recirculated through their 2nd DC scheme and the £4k limit on a second pension contributions doesn't apply if your 1st pension is DB and your 2nd is DC remarkably!

While clearly this isn't a Pension "Problem" in anyway, it's perhaps better defined as an opportunity for those Lucky Enough to be in a DB scheme while not earning sufficiently large sums to be getting near lifetime allowance(s).

Is this nuance widely known?

[Alaric]

While clearly this isn't a Pension "Problem" in anyway, it's perhaps better defined as an opportunity for those Lucky Enough to be in a DB scheme while not earning sufficiently large sums to be getting near lifetime allowance(s).

They could be giving themselves a problem in later life, if what they are getting from the DB scheme because of early retirement reductions isn't enough to support them from whenever they cease being employed. If they earn enough and have a high enough pension income, they might also spill over into a 40% tax bracket.

A parallel idea is to evade the lifetime restriction by retiring early. The income is likely to be lower, but the multiplier (20) remains the same.

[parallellines]

Presumably your colleagues can afford to contribute to the DC scheme out of their earnings, If they really are drawing on their lump sum from the DB scheme as well then they are almost certainly breaching the pension recycling rules

https://www.pensionsadvisoryservice.org ... -recycling

although the rules are so poorly understood and difficult to oversee that it doesn't surprise me if an inadvertent breach could be missed.