Deferred DB pension query

[Ecosseven]

Morning all,

I have a small deferred DB pension from my first job. I left the company in 2007 and it subsequently went into liquidation in 2018. My DB pension transferred to the Government Pension Protection Fund.

My query relates to my annual allowance. Am I correct in thinking that although the pension increases by CPI each year (up to maximum of 2.5%) this increase does not contribute towards my annual allowance since the scheme is deferred and I am not actively making any contributions?

I wanted to check that I don't have to include opening or closing amounts for this pension in my tax return.

Thanks in advance.

[PistonHead007]

Correct. Only active accrual counts towards the annual allowance.

[Kirkmoly]

I am not an expert but, as I understand it, the CPI % is added to the capitalised entitlement at the start of the year. So when that is compared with the end of year entitlement then, in your case, the difference would be precisely zero because you have not accrued any extra service years benefit. Can’t imagine any way that you have used any of your annual allowance.

[Kirkmoly]

PistonHead007 said:

Correct. Only active accrual counts towards the annual allowance.

Posting at the same time. Yours was a much more efficient way to put it than my rambling

[Sheepshanks]

Probably not an issue for you for some time, but its value does count towards your LTA - I was surprised at the value of mine from my first job I left 40yrs ago.

I always knew the pension was there but hadn't given the value a thought until I hit 65 and got a statement.

[Ecosseven]

Thanks for the responses.

I don't think I will ever exceed the lifetime allowance. The DB pension is worth around £6k at 60 years old in today's money. I'm currently 47 so it will be a minimum of 13 years before I start taking this pension.

I have a DC scheme with my current employer that I contribute to but even adding this to the DB pot I should be fine.