Can you ‘pool’ the value of separate DC and DB pensions to reduce tax?

[Zippyzoppy]

I have 2 different pensions. The first is a DB scheme which will pay me £8500 upon retirement and has a notional overall value of £170,000. Upon retiring, I can in theory take a lower pension in exchange for the usual tax free lump sum of 25%. But I don’t want to do that as I’d like to preserve my guaranteed pension at the higher amount.

However, I also have a DC pension pot worth a similar amount of £170,000. Is there any way I can somehow pool the overall value of the 2 schemes from the taxman’s point of view ( so £340,000), but take all the 25% tax free lump sum out of the DC scheme?

You can absolutely do this when the DC scheme is linked to the DB scheme (offered by same employer). In my case, the scheme itself is part DB and part DC and they will do it from that - but even before it went hybrid, you could make AVCs and use the AVCs in that way.

I don’t think you can do it independently but I’m not certain on that.

I know I’m not answering your question - but wanted to share because it could be your DB pension has an AVCs option and you can look at if it’s possible to transfer in from DC scheme? Probably only if you’re an active member of the DB scheme though.

I’ve been Googling, and seeing the hybrid scheme for HSBC (not mine!) has reminded me of something.

They mention the same thing as my scheme - that you can use the DC part to take all the TFLS.

However! They add that if you do this, you have to start your DB pension at the same time.

Which is fine if you want to retire at the scheme age (65 in this case). But if the reason for your TFLS withdrawal is to find early retirement from the TFLS, then you don’t want to trigger an actuarial reduction in DB pension for early retirement!

Thanks Coco

The problem is, I cannot transfer the DC into the DB as I am no longer an active member. It was more if there was a way of amalgamating them in the eyes of the taxman to create one overall ‘pot’.

Google Pension Bee to ask if they can help.

Post on the Pensions forum on Money Saving Expert. Lots of pension experts on there.

The only way to achieve this is to transfer one or both so they are in the same pot. You can’t link two completely separate pots in the way you’re suggesting.

Just take the 25% from your DC pot, stick it in a S&S ISA, keep invested for some additional tax free income, then just draw down enough from the remaining DC pot to keep you within your personal allowance, it will keep you as a non tax payer until State pension age and £4k is pretty much the safe withdrawal rate from a £130k pot.
If you transfer your DB pot, you will pay a huge amount for advice.

The notional value of your DB Pension is irrelevant. DB schemes do not work on a pot basis.

They do on transfer, the CETV is the ‘pot’.

Yes when a CETV is calculated, still shouldn’t refer to it as a pot though as it’s can’t be drawn on like a pot.
The OP isn’t asking about transferring it