LTA , sorry this will look stupid.

TcpnT

she has an NPA60 and could have retired in 2007 but carried on full time till 6 months past her 65th birthday and then she took phased retirement in sept 2012 took 75% of her pen and the other 25% carried over as to the TPI rules. (she as never used a financial advisor buries her head in work )

(sept 2012) pen calc on 75%of current service = 32yrs 185 days
she got £26620 yearly pen and £178000 lump ,her AVC she took at same time paid approx. £15000 lump and about £4200 yearly pen, my late fathers pen paid her approx. £1200 no lump, state pen and partime salary .
fast forwarded to now she is 72 and started the process of retiring fully had a minor stroke still recoverying , she as asked me to help. final full payment of all her teachers pen 25%12yrs and 180 days + extra 5yrs and 200 days she worked passed phase retirement(latter worked out on 7yrs partime 80% she dropped a day)
figures she as got are
lump £102896
yearly pen £15434
her phased pen is currently £30000 having gone up with cpi
her avc as gone down a little £3950
late father pen is £1100

these figures could change as we have challenged the best salary they chose and we have challenged the fact it hasnt got late retirment enhancements .NPA60 dont get it BUT NPA65 do challeging this for discrimination, mum as said a male teacher she knows started same year she did is same age as her and retired 3 years ago and got it (not sure on the chances thou, approaching union)

not kidding you but the LTA as only just popped up TPI never mentioned it and we have only found out about it while looking online over last few days (i am way off retiring and like my mother )
we have seen on line you can apply for LTA protection not sure if its too late now as she as applied and due to payout shortly and not sure if we would need it anyway .
hope this is enough info and can not thankyou enough for your help.Please be kind about my lack of knowledge

I have to disagree with Albemarle here. He would be correct using the current LTA allowance but as I understand it the larger part of the pension was taken in 2012. At this time the LTA was £1.5m.

So the main pension, AVC and lump sums at that time would only have used about 54% of available LTA.

LTA allowance now is £1.055m? so this years pension and lump sum will be about 39% of this.

Assuming that the father's pension is a widows pension from his DB scheme this would not count towards her LTA.

So total LTA used approx 93% on this rough calculation which would mean no problem and no tax to pay or actions required.

I am not an expert on this type of pension and I am sure others will be able to add more but I don't think I am misleading you too far here.

pauline123456

thanks for both your replies, TcpnT I downloaded a sheet yesterday saying what you said about the LTA being 1.mill that year and you could off set it even thou its gone down to 1 mill this year so you put my mind at rest abit thanks. Iwas really confused on the yearly income for some reason I thought they chipped away each year at the LTA and eventually everyone would have to pay it if they stayed alive long enough .
Am I write in thinking now that is only judged if your yearly income from all pension in that year x20 are greater than that years LTA you pay the penalty tax for the over LTA amount ?

pauline123456

(sorry) 1.5mill that year (2012)

pauline123456

another silly question whats the IFA

GunJack

pauline123456 wrote: »

another silly question whats the IFA

Independent Financial Adviser, emphasis on INDEPENDENT, so not tied to a certain firm's products/portfolio, can access whole of market.

I refer to my earlier answer about stupid

pauline123456

lol thanks GunJack

TcpnT

thanks for both your replies, TcpnT I downloaded a sheet yesterday saying what you said about the LTA being 1.mill that year and you could off set it even thou its gone down to 1 mill this year so you put my mind at rest abit thanks. Iwas really confused on the yearly income for some reason I thought they chipped away each year at the LTA and eventually everyone would have to pay it if they stayed alive long enough .
Am I write in thinking now that is only judged if your yearly income from all pension in that year x20 are greater than that years LTA you pay the penalty tax for the over LTA amount ?

Still some confusion I think.

The LTA calculation is only done at the time a pension is drawn. So in this case once in 2012 and again in 2019. Each time the 20x multiplier plus lump sum (only for the pension being started at that time) is calculated as a percentage of the current LTA allowance for the year in question. Each time a new pension is commenced the percentage is added to that already used to come up with a lifetime total so far. If when the last pension is started the 100% limit is breached the penalty tax will be payable on the excess. If not no tax is payable.

In this case there will be two calculations, one in 2012 and one in 2019. After that you can forget about LTA for the rest of your life. Never needs to be considered again whatever the values of the pensions in payment rise to.

For defined contribution pensions (which your mother does not have) the rules are similar but slighty different. In that case there is a possiblility that an LTA penalty liability could arise at age 75 - but this will not apply to your mother.

Your mother is in a very beneficial position and though she didn't realise it at the time has probably benefited significantly because she took the first pension in 2012 rather than now.

pauline123456

well she as deserved a bit of luck with the hard work she has put in, hope she gets out what she has paid in all them years. thanks for your help ,feel at ease alot now .
Got to admit the TPI are prity useless at answering questions and getting back to you .
thanks for this forum

xylophone

This is your mother?

https://forums.moneysavingexpert.com/discussion/6013703/need-some-to-explain-something-to-me-please

If so, did she consult an IFA?

pauline123456

yes your right and me from last post as well .

With mum not being well it has been hard to sort , we are now going to approach an IFA as well .
Have you read this post xylophone , is there anything a miss you have noticed with the figures . You was very helpful last time.