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Lump Sum and AVCs

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Lump Sum and AVCs


Postby totaltool » February 17th, 2020, 9:23 am

I am taking my DB pension from April. I am aware that this won't affect any future SIPPS contributions i.e I can still pay more than 4k pa. However I am also taking the AVCs I hold with the DB scheme to help fund a house purchase. Does anyone know if this sets the 4k limit. If so this is unavoidable but at least I could draw down 12k tax free from my SIPP this year (as have no income this tax year) if I knew future payments into it were capped.

Any comments welcome.

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Re: Lump Sum and AVCs


Postby Chrysalis » February 17th, 2020, 9:58 am

I’m pretty sure that taking the AVCs, unless it you are able to take the whole amount as tax free cash, will trigger the money purchase annual allowance. Any withdrawal from a DC pension of taxable money (other than for the purchase of a lifetime, non flexible annuity). But your scheme should be able to advise.

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Re: Lump Sum and AVCs


Postby mearnsfool » February 17th, 2020, 2:00 pm

This trick only works if your DB pension scheme will allow you to transferer your AVC's values into the core DB pension fund. Some will, some will not.

My employer did allow that.

Therefore I could take 24.9% of the total value of the pension as tax free cash without taking any of the real core DB pension as cash.

It was better to leave the original DB sum intact as taking tax free cash from the real core DB was not at a good multiplier, therfore better used as income,

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