Tax Free Lump Sum question

Tom2023

Hi

I have just received an benefits estimate for pension I am due to take next year.

At the bottom of the estimate it says....

Please note that the tax free cash lump sum may be restricted if you have any pension in payment when you elect benefits from XXXX. This will be determined when you are required to declare your benefits at the time of retirement

I do already receive a pension. I took it in 2015 and I did get a lump sum with it.

How will they calculate what my maximum TFLS from this new pension will be?

Thanks in advance for any help.

want_to_save

the maximum amount of TFLS is either 25% of the life time allowance (£250k at the moment as LTA is 1m) or 25% of your fund if that is lower. If you have had a previous pension that you took a lump sum from and say that pension was 1m so you took 250k tfls. (assuming the LTA at the time was 1m) you would not be able to take any tfls from this plan as you have already had the maximum

xylophone

http://www.pruadviser.co.uk/content/knowledge/technical-centre/pension_commencement_lump_sum_tax_free_cash/

Tom2023

xylophone wrote: »

http://www.pruadviser.co.uk/content/knowledge/technical-centre/pension_commencement_lump_sum_tax_free_cash/

That confused me.

The TFLS I took in 2015 was £200k. The LTA back then was £1.25m.

£200k represents 16% of £1.25m.

Does that mean I can take 9% of £1m i.e. £90k

Or am I limited to £50k?

anselld

Tom2023 wrote: »

That confused me.

The TFLS I took in 2015 was £200k. The LTA back then was £1.25m.

£200k represents 16% of £1.25m.

Does that mean I can take 9% of £1m i.e. £90k

Or am I limited to £50k?

£90k is correct assuming you still have at least £360k in the pot.
Can you not apply for LTA protection?

Money_Help

You could potentially apply for Fixed Protection 2016 proving you or an employer had not contributed to a pension since 5th April 2016. This would fix your lifetime allowance at £1.25m.

Even if you had contributed you could potentially still apply for individual protection if your total combined pension pot was more then £1m on the 5th April 2016. This would set your lifetime allowance at the value of your combined pot between £1m and £1.25m.