When to crystallise

cfw1994

Thx Ed!
I guess at least the LTA rises with time along with the inflation.....one small crumb of comfort (although, again, I do believe those who are facing this kind of problem are kind of the lucky ones - truly a First World Problem!)

eta: although she lost me at "pre and post A-day".....huh?!

Albermarle

I guess at least the LTA rises with time along with the inflation

For the time being but not necessarily for evermore …..

EdSwippet

cfw1994 wrote: »

eta: although she lost me at "pre and post A-day".....huh?!

6 April 2006. The day on which pension tax was "simplified" (pfft!). A few folk are in drawdown arrangements that started before then.

EdSwippet

Albermarle wrote: »

For the time being but not necessarily for evermore …..

Also, not for everybody. There is no inflation uplift in any of the LTA protection regimes. I have Fixed Protection 2016, but my protected LTA does not rise with inflation. The inflation rises in the standard LTA rapidly erode what protection I do get, so that if I haven't fully used it my protection will be entirely worthless less than a decade from now.

jamesd

jaybeetoo wrote: »

I have DB and DC pensions which total more than the LA (even with protection). ... I'm not sure when to take the DC pension - I don't need it to live on - so it is fully invested. ... Should I crystallise now, take the 25% tax free lump sum (to feed into my ISA), pay the additional tax and leave the remaining sum to grow in the SIPP and take a drawdown income when I need it?

Two things you might consider:

1. keeping as much as possible of your total equity investments in the uncrystallised pension. The highest volatility part: small caps and emerging markets ahead of large caps
2. crystallising during equity market drops. Not necessarily all at once.

This way you've concentrated the drop in the place where you'll benefit most from it.

Minimising equities in the crystallised pot would help to reduce the increase in value subject to the age 75 check. Taking any possible basic rate money out helps as well.

A bit of thinking about inheritance issues is also merited.