Defined benefit pension

Discussion in 'Insurance & Finance' started by Palfrem, Apr 29, 2014.

  1. Palfrem

    Palfrem Hardcore MB Enthusiast

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    Following the last budget and the ability from next year to take all of one's assorted pension pots in cash - am I correct in thinking that the defined benefit (final salary type) of scheme is likely to remain unchanged?

    I am taking ill-health early retirement and have a deferred final salary scheme I am considering taking. Don't want to take it now, if next year I can get my greasy hands on the whole pot and buy a Lamborghini.
     
  2. kth286

    kth286 Hardcore MB Enthusiast

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    It will not be cash from a pension for nothing.

    It will be taxed at source.

    Now you can normally take 25% of fund tax free.

    So it's decision time and weighing up pros and cons ! Ah fun !
     
  3. renault12ts

    renault12ts MB Club Veteran

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    You are correct.

    Budget 2014: Govt to block public sector pension transfers to prevent 'mass exit' | News | Money Marketing

    And many people who pull their DC schemes will, if they take it all at once, be faced with paying 40% even 45% tax.
     
  4. OP
    OP
    Palfrem

    Palfrem Hardcore MB Enthusiast

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  5. baxlin

    baxlin Hardcore MB Enthusiast

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    Depends to a great extent on what benefits the DB scheme gives.......... you could be foregoing things like indexation, spouse's pension etc, which are built in, if you change.

    As always, get professional advice, does your employer offer to facilitate this? Many do.
     
  6. mika

    mika Hardcore MB Enthusiast

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    Looking forward to seeing the lambo!
     
  7. renault12ts

    renault12ts MB Club Veteran

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    If you read to the end of the article it discusses how private DB schemes might be effected:

    "The Government is also considering a range of options to restrict transfers out of private sector DB schemes. These include:

    removing the right of all members of DB schemes to transfer to DC schemes;
    continuing to allow members of DB schemes to transfer to DC but requiring that any funds which have been transferred are ring-fenced by the receiving pension scheme and subject to the existing DC tax framework;
    placing a cap on the amount that people in DB schemes can transfer to DC schemes each year;
    continuing to allow transfers but requiring that any transfer to a DC scheme must be approved by the DB scheme trustees before it can be made;
    leaving in place the existing flexibility for members of private sector DB schemes to switch to DC schemes."
     
  8. crockers

    crockers MB Club Veteran

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    I think that you will find that historically all DB schemes used the civil service scheme as their framework.
     

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