This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies. To find out more about cookies on this website and how to delete cookies, see our Cookie Policy.

Tools which collect anonymous data to enable us to see how visitors use our site and how it performs. We use this to improve our products, services and user experience.


Tools that enable essential services and functionality, including identity verification, service continuity and site security.

Where Taxpayers and Advisers Meet

Should I opt out of my DB scheme?

Posts: 29
Joined: Wed Aug 06, 2008 4:01 pm

Should I opt out of my DB scheme?

Postby Andrew9999 » Tue Oct 23, 2018 12:50 pm

I would appreciate comments on my pension position.

I’m in a final salary DB scheme with normal retirement age of 60 and I’m currently 56.
I also have AVCs through my employer’s scheme but I stopped contributing some time ago as I had exceeded the LTA.
I have Individual Protection giving an LTA of £1.5m.
Current value of plan (DB plus AVCs) is around £1.7m.
I exceed the 150k annual input limit for tapering (after adding DB input calculation). I expect my salary to remain unchanged (no inflationary increases) until retirement. My marginal tax rate is 40%.
Due to the (standard) way my DB plan operates, I have exceeded the annual input limit in 2017/18 by about 30k (after using the small remaining balance available to carry forward). I have to pay the tax liability on this but fortunately my DB scheme operates a “scheme pays” option so I will use this and accept the related reduction in pension. This has the benefit of reducing my LTA liability.
In the current year I expect to exceed the input limit again and the value will continue to increase so increasing the LTA liability.
I do not wish to stop work now and would prefer not to take an early pension. Estimated retirement age 63.

The decision I have to take is whether to opt out of the DB Pension Scheme. My contribution is 5%.

I’m happy to pay for an IFA if appropriate but I think this may be a “no-brainer” and I should immediately opt out of the scheme. This post is to see whether others agree.
Comments welcome, including any other options I have not considered. Thanks in advance. Do ask for any other relevant facts I have omitted.

Posts: 29
Joined: Wed Aug 06, 2008 4:01 pm

Re: Should I opt out of my DB scheme?

Postby Andrew9999 » Tue Oct 23, 2018 4:04 pm

I have just realised I have omitted a crucial piece of information.

If I opt out of the fund my employer will pay me a cash allowance of 17.93% of pensionable salary (about 17% of gross pay) subject to normal tax and NI deductions, of course.

Return to “Savings & Investments, Pensions & Retirement”