urjym - just a couple of danger points to be aware of.
1 - you take the 25% tax free element.... In addition you take a further £10k which you know will be taxed....... but If you are working, the £10k will be added to your salary for the year and then taxed. So, you need to add up ALL tax incomes [including income from taxed savings/BTL income perhaps] in the tax year and ensure you don't go into 40% taxation. So, if this was in tax year 2017/18 for example, if all your earnings exceeded £45000 , then you would be taxed at 40% on the sums above £45k.
I also think that this will happen - fellow Lemons please comment!2- When you take the £10k sum, HMRC will assume that your monthly income has suddenly increased by £10k a month and you will be put on an emergency tax code. The sum will be taxed at more than 40%. So, if you think you will get £8k after tax, the figure will be closer to £6k. Of course, you can then claim this overpaid tax back. Just be aware of this in case you need to pay an £8k bill and you only initially receive
£6k!.
3- Suggest a factor of twenty [20] to gauge the value of your DB pension. I've read recently of trade in values being ~30 times. But I would take my estimated defined pension at age 60 [or 65] and then go and look at the annuity tables. Remembering benefits such as you get a degree of inflation allowance, probably 50% passes to partner on your death. So, If your pension was £12k per year, your pot would be worth £460k (joint life 50%, 3% escalation Hargreaves at age 60.
https://www.hl.co.uk/pensions/annuities ... -buy-rates4- I personally wouldn't/Didn't take the 25% tax free lump sum from a DB pension unless you really need to. Yes, you get a lump sum of cash but the reduction in income is marked. You would have to use the cash to generate an income of about 8% (I calculated) in equivalent. ok, there are circumstances when you might consider this but (cynically, do you think you are going to be given a good deal....)