Pension term assurance vs LTA

chissers

I have an old but ongoing policy for Pension Term Assurance (PTA) that I continue to pay in and get tax relief as it started pre-2006. The benefit to my family is about £800,000 if I die but no benefit if I don't.

My calculated "pension savings" to date (NHS and non-NHS) are somewhere between £1m and £1.25m so I will have to stop paying in to them in about 1-2 years and retire from the NHS at 55 ( I am currently 50) (not that I want to retire) but the budget changes will force many senior doctors to retire prematurely.

My question is if I die whether the PTA sum of £800,000 will count towards the £1.25m or £1m LTA and is it worth stopping it? I don't want to stop it because of the tax relief on contributions and I took out the policy in good faith 16 years ago. Are there any alternatives such as the lump sum being converted to a pension for my wife or starting a Relevant Life Policy?

Thank you

TH1878

chissers wrote: »

I have an old but ongoing policy for Pension Term Assurance (PTA) that I continue to pay in and get tax relief as it started pre-2006. The benefit to my family is about £800,000 if I die but no benefit if I don't.

My calculated "pension savings" to date (NHS and non-NHS) are somewhere between £1m and £1.25m so I will have to stop paying in to them in about 1-2 years and retire from the NHS at 55 ( I am currently 50) (not that I want to retire) but the budget changes will force many senior doctors to retire prematurely.

My question is if I die whether the PTA sum of £800,000 will count towards the £1.25m or £1m LTA and is it worth stopping it? I don't want to stop it because of the tax relief on contributions and I took out the policy in good faith 16 years ago. Are there any alternatives such as the lump sum being converted to a pension for my wife or starting a Relevant Life Policy?

Thank you

Quite a few question here....

1) Yes, the PTA plan will count towards the LTA. Can't say whether you should cancel it without knowing your personal circumstances, health etc.

2) The lump sum can be taken as a pension (subject to the PTA trustees agreeing) but your wife will still suffer an LTA charge of 25% as well as income tax on the income.

3) An RLP plan is only really an option if you have an active limited company, which is unlikely to be the case in your situation.

chissers

Hi
I am in good health but a 55% tax hit on £800,000 seems to much to bear.
We do have a small limited company so that might be an option.

Any thoughts?