pension lump sum withdrawal

[moneychatter]

I am 59 and have a DB pension.
can anyone tell me, am I allowed to take the 25% Lump sum allowed now, and transfer my pension at a later date. or does withdrawing from it mean I am excluded from being able to transfer

[Femi]

I am 59 and have a DB pension.
can anyone tell me, am I allowed to take the 25% Lump sum allowed now, and transfer my pension at a later date. or does withdrawing from it mean I am excluded from being able to transfer

With DB schemes it very much depends on the rules of the scheme in question. I am not aware of any DB scheme that allows you to take the 25% lump sum and leave the rest invested (and transferrable at a later date). But they might exist ?

My DB scheme does not offer any of the pension flexibilities such as Drawdown, Flexi Drawdown etc. For me it is either

= Standard TFLS - 3 times pension + immediate maximum pension
= Variable TFLS - An amount higher than standard and below Maximum + immediate appropriately reduced pension
= maximum 25% TFLS + immediate reduced pension

For all the above whether you have AVCs is also a factor ...

= Transfer the lot (not for the faint hearted with a DB scheme - be very careful to understand precisely what you are giving up and you will have to take advice if it is valued at more than £30k - for which you will have to pay) - there is no choice on this to my knoweldge, it is a legal requirement now.

I guess what I am saying is - you really need to ask the DB provider ...

Best wishes and "Happy retirement"

Femi

[staffordian]

I am 59 and have a DB pension.
can anyone tell me, am I allowed to take the 25% Lump sum allowed now, and transfer my pension at a later date. or does withdrawing from it mean I am excluded from being able to transfer

Have you actually checked you can transfer your pension, regardless of the lump sum query?

As I understand it, you need to have taken advice before transferring from a DB scheme, and in general, few advisers will recommend it as these schemes tend to be the Rolls Royces of pensions.

I'm unsure of the details but I think most schemes are reluctant (at best) to permit such transfers without an advisor giving their blessing.

[Femi]

As I understand it, you need to have taken advice before transferring from a DB scheme, and in general, few advisers will recommend it as these schemes tend to be the Rolls Royces of pensions.

I'm unsure of the details but I think most schemes are reluctant (at best) to permit such transfers without an advisor giving their blessing.

I think both of these statements are accurate.
= Very few advisors will recommend you transfer (but they will charge you handsomely for the advice) - Pensionwise might give you free advice but whether your DB scheme will accept that is to be determined.

https://www.moneyhelper.org.uk/en/pensions-and-retirement/pension-wise

= I think it is now a legal requirement to get advice if the value of the transfer is more than £30,000 (a pretty low bar for a DB scheme)

[mc2fool]

As I understand it, you need to have taken advice before transferring from a DB scheme, and in general, few advisers will recommend it as these schemes tend to be the Rolls Royces of pensions.

I'm unsure of the details but I think most schemes are reluctant (at best) to permit such transfers without an advisor giving their blessing.

I think both of these statements are accurate.
= Very few advisors will recommend you transfer (but they will charge you handsomely for the advice) - Pensionwise might give you free advice but whether your DB scheme will accept that is to be determined.

https://www.moneyhelper.org.uk/en/pensions-and-retirement/pension-wise

= I think it is now a legal requirement to get advice if the value of the transfer is more than £30,000 (a pretty low bar for a DB scheme)

Pensionwise only advise on DC schemes, not DB ones:

"Pension Wise is a free government service that offers free, impartial guidance. It outlines the options for people with defined contribution pensions.
:
You can get free guidance from Pension Wise if:

. you’re aged 50 or over, and
. have a UK-based defined contribution pension – not a final salary or career average pension."
https://www.moneyhelper.org.uk/en/pensions-and-retirement/pension-wise/book-a-free-pension-wise-appointment

Otherwise most of the above is true.

If your pot is valued at £30,000 or more then you must, by law, get advice before transferring out of a DB scheme.
Most advisors will, in most cases, advise against.
All advisors will charge you an arm and a leg, irrespective; think at least 1% but with a minimum of several thousand £s.
Having taken advice most will let you transfer out of a DB scheme irrespective of the advice (as long as you have a DC scheme to go to).
However, it's very difficult to find an DC scheme (SIPP, etc) that will let you transfer in to it against advice. (Known as the "insistent client").

This is worth a read: https://www.moneyhelper.org.uk/en/pensions-and-retirement/building-your-retirement-pot/transferring-your-defined-benefit-pension

[Dod101]

As I understand it, you need to have taken advice before transferring from a DB scheme, and in general, few advisers will recommend it as these schemes tend to be the Rolls Royces of pensions.

I'm unsure of the details but I think most schemes are reluctant (at best) to permit such transfers without an advisor giving their blessing.

I think both of these statements are accurate.
= Very few advisors will recommend you transfer (but they will charge you handsomely for the advice) - Pensionwise might give you free advice but whether your DB scheme will accept that is to be determined.

https://www.moneyhelper.org.uk/en/pensions-and-retirement/pension-wise

= I think it is now a legal requirement to get advice if the value of the transfer is more than £30,000 (a pretty low bar for a DB scheme)

Pensionwise only advise on DC schemes, not DB ones:

"Pension Wise is a free government service that offers free, impartial guidance. It outlines the options for people with defined contribution pensions.
:
You can get free guidance from Pension Wise if:

. you’re aged 50 or over, and
. have a UK-based defined contribution pension – not a final salary or career average pension."
https://www.moneyhelper.org.uk/en/pensions-and-retirement/pension-wise/book-a-free-pension-wise-appointment

Otherwise most of the above is true.

If your pot is valued at £30,000 or more then you must, by law, get advice before transferring out of a DB scheme.
Most advisors will, in most cases, advise against.
All advisors will charge you an arm and a leg, irrespective; think at least 1% but with a minimum of several thousand £s.
Having taken advice most will let you transfer out of a DB scheme irrespective of the advice (as long as you have a DC scheme to go to).
However, it's very difficult to find an DC scheme (SIPP, etc) that will let you transfer in to it against advice. (Known as the "insistent client").

This is worth a read: https://www.moneyhelper.org.uk/en/pensions-and-retirement/building-your-retirement-pot/transferring-your-defined-benefit-pension

I am long since past the stage of tis sort of thing but my daughter is interested and not surprisingly does not have a lot of interest and asks me! So am grateful for this stuff.

Pension freedoms are not quite as free as they were it seems, but I understand that because old style DB schemes are very valuable for most pensioners.

Dod

[Alaric]

Pension freedoms are not quite as free as they were it seems, but I understand that because old style DB schemes are very valuable for most pensioners.

The other side of the coin is that transfer values rarely properly represented compensation for the valuable benefits being given up. That particularly applied where there were embedded options. such as being able to rejoin the scheme if reemployed by the original employer or an employer they shared a transfer club with.

[ursaminortaur]

I am 59 and have a DB pension.
can anyone tell me, am I allowed to take the 25% Lump sum allowed now, and transfer my pension at a later date. or does withdrawing from it mean I am excluded from being able to transfer

Even with a DC scheme taking the TFLS changes the status of the pension ie crystallises it and puts it into drawdown (even if you then decide not to take any potentially taxable drawdown payments). Hence I'm pretty certain you won't be able to just take the TFLS from a DB pension you would actually have to start taking that DB pension (and if you do start taking it there would likely be an actuarial reduction in how much you would get if you were taking it before the normal retirement age for the DB scheme).

As others have mentioned you could look at transferring the DB pension to a DC scheme, eg a SIPP, where you could access it using pension freedoms. However such transfers are not possible at all if it is an unfunded public sector scheme and difficult if it is a private sector scheme or funded public sector scheme (such as the LGPS). If the transfer value is more than £30,000 then you legally have to take advice from a qualified professional which will most likely be expensive and result in a recommendation not to transfer. Having taken advice you can then ignore the negative recommendation and insist on proceeding with the transfer. Unfortunately few pension providers nowadays are prepared to accept transfers from such insistent clients which will severely restrict who you can transfer to.

[Femi]

Pensionwise only advise on DC schemes, not DB ones:

"Pension Wise is a free government service that offers free, impartial guidance. It outlines the options for people with defined contribution pensions.
:
You can get free guidance from Pension Wise if:

. you’re aged 50 or over, and
. have a UK-based defined contribution pension – not a final salary or career average pension."
https://www.moneyhelper.org.uk/en/pensions-and-retirement/pension-wise/book-a-free-pension-wise-appointment

Otherwise most of the above is true.

If your pot is valued at £30,000 or more then you must, by law, get advice before transferring out of a DB scheme.
Most advisors will, in most cases, advise against.
All advisors will charge you an arm and a leg, irrespective; think at least 1% but with a minimum of several thousand £s.
Having taken advice most will let you transfer out of a DB scheme irrespective of the advice (as long as you have a DC scheme to go to).
However, it's very difficult to find an DC scheme (SIPP, etc) that will let you transfer in to it against advice. (Known as the "insistent client").

This is worth a read: https://www.moneyhelper.org.uk/en/pensions-and-retirement/building-your-retirement-pot/transferring-your-defined-benefit-pension

Thanks for clarifying - I just re read my documentation and now see that the suggestion my DB scheme gave for using Pension Wise was in relation to the attached AVC pot (which is a DC pension in trust) so this makes complete sense.

[Femi]

Pension freedoms are not quite as free as they were it seems, but I understand that because old style DB schemes are very valuable for most pensioners.

The other side of the coin is that transfer values rarely properly represented compensation for the valuable benefits being given up. That particularly applied where there were embedded options. such as being able to rejoin the scheme if reemployed by the original employer or an employer they shared a transfer club with.

I agree - also many DB schemes have very favourable guaranteed increases - mine for example is fully RPI linked (not capped at 5%) - very useful in a high inflation environment!