Crystalisation benefits

Rodz1300

I have been a member here for a couple of months and am really enjoying reading the various threads and advice.

Having spent a fair bit of time researching pension rules (as a complete layman- and probably not fully understanding, It seems to me that crystalising pensions at 55 may be an option for me given that i would like to consider a better work life balance from 55, but may also wish to work until retirement age either part time or full time. whilst i remain full time i am maxing my annual allowance and have a reasonable chance of breaching the LTA in early 60's.

I am aware of the Tax implications for my family in respect to CGT if i die after crystalisation (but have good death in service cover from my employer, and am aware that i would lose 90% of annual allowance if i take regular pension income post criystalisation

Does the following scenario seem practicable (or even possible)

crystalise pensions at 55 ( around 70% of LTA )
Take 25% tax free
value of pensions would be tested at this point enabling further tax efficient contributions and the growth of post crystalisation deposited funds to count towards remaining LTA.

For example 70% of LTA crystalised and the growth of those crystalised funds not counting towards the remaining 30% of LTA

The advantages to me seem to be:

maximising the LTA and tax relief advantages ( this is the point i am most unsure about)

Whilst i remain working full time, I can deposit the 25% tax free cash- up to maximum annual ISA allowance into my wife and my Share ISA's each year. whilst still making use of annual pension allowance and company pension contributions up to remaining LTA

If i go part time, i can still make contributions as i can afford and have an option to supplement income from tax free ISA savings. (avoiding drawing regular income from crystalised funds)

once i finally retire ( or reach LTA) crystalise the remaining pension pot, take 25% tax free and have options that will assist with being tax efficient in respect to regular drawdown pension earnings

i may have this wrong but would appreciate any views

Tks

anselld

Not necessarily a bad plan, however two points ...

(1) All growth of the crystalised funds, unless withdrawn, would still be tested again at 75 so it is not "out of the woods".

(2) As you crystalise you are losing the benefit of annual CPI increases in the LTA. So if you crystalise 70% you are only in effect getting indexation on the remaining 30% of LTA.

Rodz1300

Thanks anselld,

The second point had occurred to me but not the first- which does seem the most impactful.
I assume then that I only gain an LTA advantage in respect to the 25% taken as tax fee cash and would have to balance that against losing 70% of LTA inflation increases.

Question seems to therefore be: Would any CGT over threshold payable on funds taken out of the scheme (but not drawn upon) be better than the growth of 75% of crystalised funds counting towards LTA.

Seems like a new tab to the spreadsheet is required :-)