Enter into capped drawdown now?

spakkaman

Hmmmm. The article in the Mail has made me ponder.
http://www.thisismoney.co.uk/money/pensions/article-2966937/Pension-freedom-tax-tip-wealthy-Start-capped-drawdown-NOW.html

I am I guess a wealthy pensioner. I am already +£50k on a final salary scheme and at 57 am still earning a whack from working. I am probably £30k away from hitting my lifetime allowance through my SIPP. I have bunged £40k into this recently to max out on tax relief.

So I can see the point in going for capped DD to keep the option of £40k pa contributions going but Im fast reaching the LTA. But I think there's every chance the LTA will be lifted completely in the next year when a 30% universal relief might come in (seems a fair proposal to me).

I think I might work till 60 so my window of opportunity to max out is quite narrow. I was waiting on the LTA issue to unfold but I hadnt thought about the issue raised in this article which is of the moment.....

I have a final salary pension and a couple of small deferred pensions that come up at 65 and a couple of hundred thousand in my SIPP. My wife has very little by way of pension which stops me from feeling too smug - we only recently woke up to the fact that she can get tax relief on a small pension saving each year.

So any thoughts peeps on what I should do?
all contributions gratefully received.

jamesd

Start capped drawdown ASAP. We're getting uncomfortably close to the point at which pension providers just won't have time/people to get it done in time. Even withdrawing at the GAD limit amount will reduce your chance of being over the LTA at the later age 75 check.

Forget lifting - well, removing - of the LTA. Not going to happen, too many parties think that anyone with that much is an undeserving rich person without bothering to realise just what annuity value it buys. A higher LTA might happen if we get a Conservative-only government, else it'll probably be reduced.

It's a shame you didn't start capped drawdown back in 2013-14 when the LTA used would have been a percentage of £1.5 million instead of today's £1.25 million. Since it appears that you were not over 1.25 million on 5 April 2014 you can't apply for Individual protection 2014 to keep the 1.5 million limit and still make pension contributions.

You might find it useful to start learning about Venture Capital Trusts.