Exceeded LTA no point crystallising the rest?

coyrls

Chickereeeee said:

So if you have an income portfolio that delivers healthy dividends, but only grows at about inflation rate, you could be hit by an LTA charge, purely depending on if inflation is high or low over the period.
Seems harsh.

But there's nothing to stop you withdrawing growth as well as dividends prior to reaching 75.

garmeg

coyrls said:

Chickereeeee said:

So if you have an income portfolio that delivers healthy dividends, but only grows at about inflation rate, you could be hit by an LTA charge, purely depending on if inflation is high or low over the period.
Seems harsh.

But there's nothing to stop you withdrawing growth as well as dividends prior to reaching 75.

But then you have a much smaller pot at 75 than you would have liked and, consequently, a smaller pension.

cfw1994

garmeg said:

coyrls said:

Chickereeeee said:

So if you have an income portfolio that delivers healthy dividends, but only grows at about inflation rate, you could be hit by an LTA charge, purely depending on if inflation is high or low over the period.
Seems harsh.

But there's nothing to stop you withdrawing growth as well as dividends prior to reaching 75.

But then you have a much smaller pot at 75 than you would have liked and, consequently, a smaller pension.

I reckon most folk only need a much smaller pot by the time they're 75.....

Albermarle

garmeg said:

coyrls said:

Chickereeeee said:

So if you have an income portfolio that delivers healthy dividends, but only grows at about inflation rate, you could be hit by an LTA charge, purely depending on if inflation is high or low over the period.
Seems harsh.

But there's nothing to stop you withdrawing growth as well as dividends prior to reaching 75.

But then you have a much smaller pot at 75 than you would have liked and, consequently, a smaller pension.

If you put aside the financial issues of avoiding paying LTA and leaving pensions as inheritance , then I think it would be logical that your pot at 75 will be less than at 60/65 as you will have been receiving a retirement income. Which is the whole idea of pensions in the first place. Something that seems to be forgotten sometimes.

coyrls

garmeg said:

coyrls said:

Chickereeeee said:

So if you have an income portfolio that delivers healthy dividends, but only grows at about inflation rate, you could be hit by an LTA charge, purely depending on if inflation is high or low over the period.
Seems harsh.

But there's nothing to stop you withdrawing growth as well as dividends prior to reaching 75.

But then you have a much smaller pot at 75 than you would have liked and, consequently, a smaller pension.

Well, you've got a choice, you can leave it in and pay the LTA charge.  Or, when I last looked at this in detail, taking a short term annuity didn't triggger a BCE, so you could also take out a short term annuity with the excess just prior to 75.

garmeg

coyrls said:

garmeg said:

coyrls said:

Chickereeeee said:

So if you have an income portfolio that delivers healthy dividends, but only grows at about inflation rate, you could be hit by an LTA charge, purely depending on if inflation is high or low over the period.
Seems harsh.

But there's nothing to stop you withdrawing growth as well as dividends prior to reaching 75.

But then you have a much smaller pot at 75 than you would have liked and, consequently, a smaller pension.

Well, you've got a choice, you can leave it in and pay the LTA charge.  Or, when I last looked at this in detail, taking a short term annuity didn't triggger a BCE, so you could also take out a short term annuity with the execess just prior to 75.

So taking a 5 (max) year annuity at age 74 with the excess over LTA avoids the age 75 LTA test? Seems too good to be true.

coyrls

garmeg said:

coyrls said:

garmeg said:

coyrls said:

Chickereeeee said:

So if you have an income portfolio that delivers healthy dividends, but only grows at about inflation rate, you could be hit by an LTA charge, purely depending on if inflation is high or low over the period.
Seems harsh.

But there's nothing to stop you withdrawing growth as well as dividends prior to reaching 75.

But then you have a much smaller pot at 75 than you would have liked and, consequently, a smaller pension.

Well, you've got a choice, you can leave it in and pay the LTA charge.  Or, when I last looked at this in detail, taking a short term annuity didn't triggger a BCE, so you could also take out a short term annuity with the execess just prior to 75.

So taking a 5 (max) year annuity at age 74 with the excess over LTA avoids the age 75 LTA test? Seems too good to be true.

It doesn't seem well publicised but that's how I read it, last time I looked.  I will check again when I'm nearer 75 if it's still relevant!

cfw1994

coyrls said:

garmeg said:

coyrls said:

garmeg said:

coyrls said:

Chickereeeee said:

So if you have an income portfolio that delivers healthy dividends, but only grows at about inflation rate, you could be hit by an LTA charge, purely depending on if inflation is high or low over the period.
Seems harsh.

But there's nothing to stop you withdrawing growth as well as dividends prior to reaching 75.

But then you have a much smaller pot at 75 than you would have liked and, consequently, a smaller pension.

Well, you've got a choice, you can leave it in and pay the LTA charge.  Or, when I last looked at this in detail, taking a short term annuity didn't triggger a BCE, so you could also take out a short term annuity with the execess just prior to 75.

So taking a 5 (max) year annuity at age 74 with the excess over LTA avoids the age 75 LTA test? Seems too good to be true.

It doesn't seem well publicised but that's how I read it, last time I looked.  I will check again when I'm nearer 75 if it's still relevant!

Er....wrong way round, I *think*
From https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm088640
"A lifetime allowance test is triggered through BCE 4 every time a lifetime annuity contract is purchased under a money purchase arrangement before the member has reached age 75.  Where the lifetime annuity is purchased after the member has reached age 75 there is no BCE 4 as the only BCE that can occur after age 75 is a BCE 3"

coyrls

My point was that purchasing a short term annuity does not trigger a BCE prior to 75, I know that purchasing a standard lifetime annuity before 75 triggers a BCE.

garmeg

coyrls said:

My point was that purchasing a short term annuity does not trigger a BCE prior to 75, I know that purchasing a standard lifetime annuity before 75 triggers a BCE.

Looking at the legislation it seems you are correct.