Life Time Allowance and Private Pension

stoozie1

Flugelhorn wrote: »

Thanks for comments and advice - should really think of taking pension slightly early, but actually quite like being at work at the moment :rotfl: though suspect things may change at work later in the year and I will look again at the options of going sooner.

I think your scheme allows you to retire and then go back 48hrs later.

Time it over the weekend and no-one except HR needs to know Slightly flippant, but my partner who's pension you kindly advised me about is in a position of seeing a few colleagues do this recently.

jamesd

The approach that stoozie1 mentioned could well be useful.

Flugelhorn

would be great to be able to do that - have to not work for 24 hours and then no more than 16 hours a week for the next 4 weeks.

Trouble is would mean resigning my nice permanent longstanding contracts and probably having it replaced by some not so good one (have been TUPEd several times). Also current employers looking to shed staff as they are strapped for cash and may not re-employ me... plenty of work elsewhere though. Might become quite attractive!

kidmugsy

Another thing you could do with the AVC is transfer it to (say) a SIPP and then if you die before 75 it would be available tax-free to your nominated beneficiary. Are you feeling lucky?

The_Doc

BCE 5C or BCE 5D mean that if the AVC is left uncrystallised and the OP died before 75, then LTA charge stil applies

Flugelhorn

The_Doc wrote: »

BCE 5C or BCE 5D mean that if the AVC is left uncrystallised and the OP died before 75, then LTA charge stil applies

that was what I was wondering - what happens if I simply do nothing with the money?

caveman8006

Apparently, if you die before 75, then any investment gains since your first BCE are NOT counted while if you reach 75 alive, they are. Can make a crazy difference: on a pot of £1m crystallised at 55 and then growing at 5%pa with out withdrawals, the LTA charge would go from 0 to £900k overnight! Stupid system...

Flugelhorn

The_Doc wrote: »

BCE 5C or BCE 5D mean that if the AVC is left uncrystallised and the OP died before 75, then LTA charge stil applies

caveman8006 wrote: »

Apparently, if you die before 75, then any investment gains since your first BCE are NOT counted while if you reach 75 alive, they are. Can make a crazy difference: on a pot of £1m crystallised at 55 and then growing at 5%pa with out withdrawals, the LTA charge would go from 0 to £900k overnight! Stupid system...

Confused now - does the LTA still count before or after 75?

coyrls

The LTA is applied to non-crystallised funds if you die before 75; it is not applied to crystallised funds.

caveman8006

Exactly.


Hence the peculiar treatment of investment gains on "crystalized" drawdown accounts: if you die before 75, then any such gains are not subject to the LTA (they could be as much as £1.6m in my example), but when/if you reach 75, they are included in the BCE carried out then (and would be subject to eg. a £900k tax at 55% if taken as a lump sum). Big 74 and 364/365 party at a Swiss clinic anybody?!