Lifetime Pension Allowance - Will I be near it !?

jamesd

Limiting contributions is OK for today but the lifetime allowance does something about money paid in before there was a lifetime allowance. Personally I'd prefer a limit on lifetime pension subscriptions since that's what dictates the tax relief given and it allows for uneven earning and redundancy payments and such.

darren72

jamesd wrote: »

Limiting contributions is OK for today but the lifetime allowance does something about money paid in before there was a lifetime allowance.

Thank you.

Oh, so contributions made before they introduced the lifetime allowance may not count ?

ex-pat_scot

darren72 wrote: »

Thank you everyone who has taken the time to reply - I really appreciate it.

Looking at those figures then I would say I am best not putting anymore into a pension at the moment.

I've already been investing into VCT's and more recently into a EIS and SEIS - I think this is probably the way to go for the moment in order to get the tax breaks.

Surely it would be easier for all involved if they limited the contributions rather than what it is going to be worth when you retire - Or would that be too much like common sense !?

I can see your logical conclusion to stop contributing - but that's an utterly daft consequence of the policy of limiting pot value at retirement.
Frankly, if you get company contributions then it might still be worth your while continuing to contribute.
IF (and it's a big IF) the LTA continues, then you'd get a 55% tax charge on realisation of the pension, but that would still work out broadly tax neutral.
IF the LTA changes (likely) or disappears (hopeful, but unlikely), then you'll have to take whatever protection will be on offer at the time.


You have 19 years (perhaps more) until you can first access these funds. That's an enormous amount of time in which successive annual budgets can (and will) change pensions beyond all recognition.


Like many, I view the £1m pension pot as a Nice Problem To Have. If I had that amount and I could retire, then I would.
I'm 47 and my "Number" is roughly £1m, in no small way dictated by the LTA.


Without LTA, then I'd possibly work a few years beyond that number, and in doing so would generate significant additional tax revenues.

EdSwippet

darren72 wrote: »

Oh, so contributions made before they introduced the lifetime allowance may not count ?

No, they count too. Under "pension simplfication"(*) ten years ago the govt introduced enhanced protection and primary protection regimes for pre A-day pension savings vulnerable to the newly introduced lifetime allowance, set initially at £1.5m and promised (emptily) to rise with inflation.

(*) After more-or-less annual reductions in limits and allowances since, each now with its own new special protection regimes, notice how hollow that term sounds today!