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  • FIRST POST
    • eric100
    • By eric100 20th Mar 17, 7:09 PM
    • 15Posts
    • 1Thanks
    eric100
    LTA and BCEs
    • #1
    • 20th Mar 17, 7:09 PM
    LTA and BCEs 20th Mar 17 at 7:09 PM
    HI,

    Hopefully someone can help explain LTA to me please?

    I'm trying to understand more about how LTA would affect me if I decided
    to transfer out of my DB scheme. I believe I will have 3 pensions that will qualify as BCE events.

    Potentially as follows:

    A) Final salary transfer to SIPP (later this year) approx £950k
    B) DC scheme pot transfer to SIPP (later this year) approx £300k
    C) 2nd Final salary scheme due to be paid in 2025 approx £3kpa (remaining as DB pension)

    Assuming I wanted to transfer A & B on the same day and I wanted to maximise TFLS then
    I'm assuming I would be stuffed and have to pay 55% on a large part of the £75k from the £300k (assuming that was the second pension to transfer)

    Doing a little reading seems to suggest that any TFLS is assessed first and then the associated remaining sum of the pension is assessed. So you can't just take the 25% TFLS from both A & B and then assess the remaining amounts from A & B and pay 25% tax on the excess above LTA at drawdown time?

    Am I on the right lines here and are there any suggested strategies for maximising tax efficiency with regards to LTA (I could of course not transfer out)

    Other than that I suppose I delay the transfer of B until the LTA has increased in line with CPI but then I would be drawing larger sums of from A until such time and would probably be quite some time.

    Also does fund growth have any impact on the LTA, I'm assuming not if I'm also in a flexi-drawdown

    Many thanks
Page 2
    • ThinkingOutLoud
    • By ThinkingOutLoud 22nd Mar 17, 1:23 PM
    • 1,396 Posts
    • 1,301 Thanks
    ThinkingOutLoud
    Yes ed. Why would you crystallize if you weren't looking to withdraw?
    Originally posted by LOST
    You have lost me LOST! Ed is right.

    This might help -https://www.intelligentpensions.com/media/1169/lifetime-allowance-factsheet1.pdf, but then so might the replies above have helped.

    The possible crystallisation event are various as defined in the link. The point at which they occur AND your "use" of % of any LTA over time and the relevant LTA limit at each crystallisation all matter, as their example outlines.

    TBH I think it may be worth you getting some formal advice - so someone can walk through these things and your options with you. There are some big consequences for making the wrong choices given on the base of the numbers you will probably exceed the LTA - but you might be able to take advantage of a protection to limit that.
    I am just thinking out loud - nothing I say should be relied upon!
    I do however reserve the right to be correct by accident.
    • eric100
    • By eric100 23rd Mar 17, 7:52 PM
    • 15 Posts
    • 1 Thanks
    eric100
    Thanks all.....complicated indeed. Here I was ploughing money into my DC pension for the last couple of years only now to realise I'll have to give it back to the tax man (as pointed out by Ed).

    Certianly will be taking more advice on the matter.
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