Increasing DC contributions when DB pension matures

[Riven01]

Hi,

Apologies if this isnt the correct section, just need a little clarification.

In 2 months I will be 60 (where did the time go!) and will start receiving a DB income from a previous company, after I have taken the 25% lump sum, I will be left with approx £17000 a year income from this.

I am currently in another job with a DC pension (salary sacrifice), and earn £90k a year, currently I pay in 22% of my salary, am I allowed to increase the % contributions from my salary to the DC pension to offset the separate income from my DB pension?

I am not planning to use any of the tax-free lump sum for this just the income from my pension and I know will take a tax hit but what can you do.

Thank you

[Urbandreamer]

Hi,

Apologies if this isnt the correct section, just need a little clarification.

In 2 months I will be 60 (where did the time go!) and will start receiving a DB income from a previous company, after I have taken the 25% lump sum, I will be left with approx £17000 a year income from this.

I am currently in another job with a DC pension (salary sacrifice), and earn £90k a year, currently I pay in 22% of my salary, am I allowed to increase the % contributions from my salary to the DC pension to offset the separate income from my DB pension?

I am not planning to use any of the tax-free lump sum for this just the income from my pension and I know will take a tax hit but what can you do.

Thank you

Well, you can increase your pension contributions to £60k gross as you have the salary to cover that.
You might however only want to increase it to £37k (aprox 40% of salary) as any more might effect your lifestyle.

NOTE the simple assumption is that by spending your DB upon food etc, then that amount of salary becomes available to invest in your pension.

[Alaric]

In 2 months I will be 60 (where did the time go!) and will start receiving a DB income from a previous company, after I have taken the 25% lump sum, I will be left with approx £17000 a year income from this.

Most DB schemes contain provisions to defer taking the retirement benefit and the uplift can look generous. It may be worth exploring as another option.

[Riven01]

The uplift is 3.9 percent which I have no idea if that is generous or not, plus I do fancy a holiday

And its not a problem with lifestyle really.

I was more concerned about HMRC casting their beady eye and thinking "you've suddenly upped your pension contribution by XX% so you're using your tax free lump sum to invest in your DC pension matey" when I clearly won't be, I will simply be replacing salaried income with pension income (and as I said am quite prepared to pay the tax on it).

But from experience trying to have any sort of cogent "discussion" with them is difficult to say the least, which is why I want to avoid ANY possible reason for them to be looking.