Active discussions

Meet the Other Phone. Child-safe in minutes.

Meet the Other Phone.
Child-safe in minutes.

Buy now

Please or to access all these features

Talk
Money matters

Find financial and money-saving discussions including debt and pension chat on our Money forum. If you're looking for ways to make your money to go further, sign up to our Moneysaver emails here.

Original poster

Life time allowance and defined benefit pension

15 replies

Silverclocks · 07/04/2022 17:54

I'm fairly recently widowed in early middle age, which means my pension income has taken a big hit. I have some small income from DH's pensions, but a lot less than half what we would have expected to share at his normal retirement age.

(As an aside, being single is very expensive. My income has halved buy my expenses remain practically the same. )

I have some life insurance money which I was thinking of putting into some sort of pension arrangement.

However, I have just asked for a quotation for my own (fairly modest) DB pension and the transfer value is a shockingly high amount of money.

I've no intention of moving it, but presumably that amount "uses up" my lifetime allowance?

Also, does the value of DH's pensions, which I'm already getting an income from, count too?

I'll take some financial advice before I actually do anything, but I like to know a bit about what I'm talking about/looking at first.

OP posts:
ChessieFL · 07/04/2022 17:58

Yes, your DB pension (and any other pensions built up in your own name) counts towards your lifetime allowance. The pensions you are receiving in respect of your DH’s benefits do not count however.

I’m very sorry for your loss Flowers

Chasingsquirrels · 07/04/2022 18:01

Do you have earnings to enable you to make pension contributions?

Original poster
Silverclocks · 07/04/2022 18:04

Yes, I pay into a company scheme, but there's plenty of room in the annual allowance.

Based on what my DB "pot" is apparently worth, pension savings of c. £1m (the annual allowance) isn't going to provide an overly luxurious retirement. Especially if you're single, I.e only have one allowance to run a household.

OP posts:
Fireflygal · 07/04/2022 18:05

However, I have just asked for a quotation for my own (fairly modest) DB pension and the transfer value is a shockingly high amount of money

I imagine pension providers are looking to offload risk. What type of multiple did they offer you?

Original poster
Silverclocks · 07/04/2022 18:05

@ChessieFL

Yes, your DB pension (and any other pensions built up in your own name) counts towards your lifetime allowance. The pensions you are receiving in respect of your DH’s benefits do not count however.

I’m very sorry for your loss Flowers

Thank you
OP posts:
Fireflygal · 07/04/2022 18:06

Should say, your finances seems significant enough to invest in some financial advice.

I'm sorry for you loss.

Scottishflower65 · 07/04/2022 18:08

The transfer amount is not the same as the lifetime allowance.

Mia85 · 07/04/2022 18:10

If your pension remains db then the calculation for the lifetime allowance is 20 times the amount you get each year. E.g. £20k a year is £400k for the annual allowance, which actually quite generous. Use this number (plus any tax free lump sum) not the transfer value unless you actually are transferring it (which is hard to do)

Original poster
Silverclocks · 07/04/2022 18:11

@Fireflygal

Should say, your finances seems significant enough to invest in some financial advice.

I'm sorry for you loss.

Yes, didn't I say that's what I plan to do?
OP posts:
Original poster
Silverclocks · 07/04/2022 18:13

@Mia85

If your pension remains db then the calculation for the lifetime allowance is 20 times the amount you get each year. E.g. £20k a year is £400k for the annual allowance, which actually quite generous. Use this number (plus any tax free lump sum) not the transfer value unless you actually are transferring it (which is hard to do)
Ah thank that seems much more realistic. The transfer value is nearly 33 times the annual income.
OP posts:
Mia85 · 07/04/2022 18:13

Sorry meant lifetime allowance not annual allowance in post above

See eg www.gov.uk/guidance/pension-schemes-value-your-pension-for-lifetime-allowance-protection#pensions-youve-not-taken-yet

Mia85 · 07/04/2022 18:13

Sorry meant lifetime allowance not annual allowance in post above

See eg www.gov.uk/guidance/pension-schemes-value-your-pension-for-lifetime-allowance-protection#pensions-youve-not-taken-yet

Uncurtailed · 07/04/2022 18:29

Cash Transfer Value is not the same as Lifetime Allowance. You need to speak to a FA to get sound advice. However suggest you do not move money out of your DB pension as it's likely far better than any DC pension you might be considering.

Original poster
Silverclocks · 07/04/2022 18:38

@Uncurtailed

Cash Transfer Value is not the same as Lifetime Allowance. You need to speak to a FA to get sound advice. However suggest you do not move money out of your DB pension as it's likely far better than any DC pension you might be considering.
No I've got no intention of moving it, I like the certainty of it. I was just trying to work out what I have "left"
OP posts:
Chewbecca · 08/04/2022 22:10

PP are right, CETV and valuation for LTA are different.

Say the DB pension has so far reached £30kpa at retirement age, that would use up £600k of your LTA. But the CETV might be £900k+. If you transferred it (which is generally not recommended and hard and expensive to achieve), it would use the value of the moved pension (E.g. £900k+) of the LTA.

My understanding is that a widow’s pension is not part of your LTA.

New posts on this thread. Refresh page