LTA Fixed Protection Cessation Event

toesonthenose

Dear all

a complex scenario has arisen as a result of one my defined benefits pensions winding up the existing scheme and transferring the current arrangements to an individual member insurance policy.

They are advising that this results in a Fixed Protection Cessation Event which will take place in tax year 2019/20.

In summary Ive been lucky enough or hard working enough to have two defined benefit pensions which amount to 36.5% of my LTA.

I also have a defined contribution pension, uncrystallised, which is currently worth 51% of FP2016. Using the LTA of 1M then my DC is 64% ie I have reached the limit of the LTA.

I applied for and obtained FP 2016 ie LTA of £1.25M

I could of course not worry about this and just carry on drawing down my pension as planned starting next tax year and wait until I hit the 100% or when I reach 75 (if I do!) for the day when I take the tax charge when Ive used up the LTA.

I can see three options.

First as above ie not worry about.

Second persuade my pension fund trustees to change arrangements so I dont have a FP cessation event. Success unlikely

Third take a larger lump sum, say 25% tax free, before the FP protection event, and hence use up proportionally less of my LTA (while the £1.25M allowance applies) and say invest it in ISAs and then spend as planned.

Any other suggestions or thoughts as to how to proceed?

I can see this sort of thing happening more often as Pension Schemes which were defined contributions have to wind up as the number of pensioners gets below a sensible number to run them.

All help much appreciated.