Exceeded LTA no point crystallising the rest?

coyrls

garmeg said:

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.

I did look into it in detail about five years ago when I crystallised my pension and wanted to know what my options would be if I had LTA issues at 75.  I've got over 10 years before then and legislation can change and I probably won't even have the issue, so I have kept it as a possible option that I will have to re-research nearer the time if needed.

Malthusian

coyrls said:

Or, when I last looked at this in detail, taking a short term annuity didn't triggger a BCE, [...]

Bad luck, it does. They fall under BCE 1 if the funds used to buy them are previously uncrystallised. It's only short-term annuities from an already-crystallised pension that wouldn't trigger a BCE.

garmeg

Malthusian said:

coyrls said:

Or, when I last looked at this in detail, taking a short term annuity didn't triggger a BCE, [...]

Bad luck, it does. They fall under BCE 1 if the funds used to buy them are previously uncrystallised. It's only short-term annuities from an already-crystallised pension that wouldn't trigger a BCE.

I knew that, the legislation specifically mentions crystallised funds.

cfw1994

Malthusian said:

coyrls said:

Or, when I last looked at this in detail, taking a short term annuity didn't triggger a BCE, [...]

Bad luck, it does. They fall under BCE 1 if the funds used to buy them are previously uncrystallised. It's only short-term annuities from an already-crystallised pension that wouldn't trigger a BCE.

If already crystallised (& not an "Age 75" test), no annuity purchase would trigger any BCE, surely?

garmeg

cfw1994 said:

Malthusian said:

coyrls said:

Or, when I last looked at this in detail, taking a short term annuity didn't triggger a BCE, [...]

Bad luck, it does. They fall under BCE 1 if the funds used to buy them are previously uncrystallised. It's only short-term annuities from an already-crystallised pension that wouldn't trigger a BCE.

If already crystallised (& not an "Age 75" test), no annuity purchase would trigger any BCE, surely?

Sadly not, a lifetime annuity purchase from crystallised funds does trigger an LTA test, unfortunately.

Malthusian

@cfw1994 Not correct. A lifetime annuity purchase from drawdown funds triggers another BCE test, much like the age 75 test. Unless the member is over 75 or went into drawdown pre 2006. Ditto a scheme pension. See BCE 4.

coyrls

Malthusian said:

coyrls said:

Or, when I last looked at this in detail, taking a short term annuity didn't triggger a BCE, [...]

Bad luck, it does. They fall under BCE 1 if the funds used to buy them are previously uncrystallised. It's only short-term annuities from an already-crystallised pension that wouldn't trigger a BCE.

I meant from crystallised funds, as I was talking about using the excess over the LTA to purchase a short term annuity from crystallised funds prior to the LTA test at 75

cfw1994

Malthusian said:

@cfw1994 Not correct. A lifetime annuity purchase from drawdown funds triggers another BCE test, much like the age 75 test. Unless the member is over 75 or went into drawdown pre 2006. Ditto a scheme pension. See BCE 4.

Thanks for the links & correcting me - always learning 
There is the caveat of:

if the lifetime annuity is bought from income drawdown funds, the crystallised value is:

• the market value of the member's income drawdown fund, at the time the lifetime annuity is being bought, less
• the amount originally moved into income drawdown at the outset.

So if, for example, the amount that went into drawdown was £400k, and any growth was 'used up' by the point of the annuity purchase, then the value would be zero.
Best keep a close eye on this stuff, eh!!

garmeg

cfw1994 said:

Malthusian said:

@cfw1994 Not correct. A lifetime annuity purchase from drawdown funds triggers another BCE test, much like the age 75 test. Unless the member is over 75 or went into drawdown pre 2006. Ditto a scheme pension. See BCE 4.

Thanks for the links & correcting me - always learning 
There is the caveat of:

if the lifetime annuity is bought from income drawdown funds, the crystallised value is:

• the market value of the member's income drawdown fund, at the time the lifetime annuity is being bought, less
• the amount originally moved into income drawdown at the outset.

So if, for example, the amount that went into drawdown was £400k, and any growth was 'used up' by the point of the annuity purchase, then the value would be zero.
Best keep a close eye on this stuff, eh!!

What if you only use a portion of the fund to buy a lifetime annuity?

Albermarle

So if, for example, the amount that went into drawdown was £400k, and any growth was 'used up' by the point of the annuity purchase, then the value would be zero.

What if the pot had shrunk to say £300K before buying the annuity ? Could you claim back a negative LTA contribution ?

I suspect not