Lifetime Allowance Question

peterg1965

I am about to retire from my current job and start to draw my Final Salary Pension - it is Armed Forces AFPS75 scheme.

I understand that the valuation for LTA purposes of this final salary pension is 20 X Annual pension + lump sum, which for me is £772,000. Am I right in saying that I will receive an LTA certificate (form HMRC or the pension provider) which will state what percentage of the LTA I have used, so in my case £772,000/£1,250,000 = 61.7%.

I also have a Personal Pension (SIPP with £100K in it for which I am still contributing) and am about to start a new occupational pension (Defined Contribution) with a new employer. So, with the new LTA of £1M from next year, am I right in saying that my remaining allowance is 38.3% (100-61.7)of the new LTA, so £383,000?

Is this correct?

davide691

I’m pretty sure that the relevant number to compare against LTA is sum of that final salary figure + SIPP value, i.e., 772+100=872

peterg1965

davide691 wrote: »

I’m pretty sure that the relevant number to compare against LTA is sum of that final salary figure + SIPP value, i.e., 772+100=872

My understanding was that the calculation is done when you crystallise the pension, so the SIPP doesn't count at the moment as I will not crystallise that for a number of years.

Triumph13

Depending on what anti avoidance rules they bring in, best thing would be to crystallise that SIPP before the LTA drops. It will then use a smaller percentage of the LTA. You can also leave the crystallised funds growing in drawdown outside the LTA.

peterg1965

Triumph13 wrote: »

Depending on what anti avoidance rules they bring in, best thing would be to crystallise that SIPP before the LTA drops. It will then use a smaller percentage of the LTA. You can also leave the crystallised funds growing in drawdown outside the LTA.

I wish I could, but I am 49.

kidmugsy

From what date does the new LTA apply?

davide691

From April 2016