LTA allowance exceeded at 36

elouise01582

Good shout Abermarle.

PdPaul

Thanks for all the comments. First to answer the most recent; I have appointments with 5 different advisors when I get home, I work away so I'm expecting a busy week next week and wanted to see some other thoughts from my initial research and having never dealt with an advisor before very sceptical about who's interests they have at heart. 

With regards upgrading the asset classes, yes that is my thoughts on it, take out an interest only mortgage on a 1.2million property, then in 25years when I can get my pension, which should have tripled I can pay it off with the 25% tax free lump. Biggest risk with that is a change in interest rate on such a large sum.

With regards to wife, I have read some information about that transfer of pension so I can effectively use 2 x LTA - obviously that comes with its own risks, but certainly a good move if this is legitimate advice when married.

How I've managed this was to move my workplace pension out into a SIPP, work pay into my pension, every few months I transfer it out and into a SIPP and then make my own investment decisions. Obviously I read a lot of books and articles about investing before taking that huge step, also it has taken 10years, not an overnight success story. 

Apologies about not using the quote button, I'm on my phone until next week. 

Lastly about moving a pension abroad now, I would have no faith in that process at all. 

PdPaul

LISA is of no use to me as far as I know. I've got a house already and use an ISA for normal savings. Unless I can transfer from SIPP to LISA - which you cant.

Never looked at state pension, why would this matter..

SouthCoastBoy

Agreed with the interest rate risk with regards to a large mortgage, however there are some long term fixed rate deals that can mitigate some of that risk, such as 7 year and 10 year fixed rates. The caveat to that is they come with penalties if you want to exit the fixed term

EdSwippet

PdPaul said:

With regards upgrading the asset classes, yes that is my thoughts on it, take out an interest only mortgage on a 1.2million property, then in 25years when I can get my pension, which should have tripled I can pay it off with the 25% tax free lump. ...

Not going to work out that neatly, I'm afraid. The PCLS is limited to the lower of 25% of your pension balance and 25% of the available lifetime allowance. In practice then, the LTA puts a de facto upper bound on the PCLS.

More here: Pension commencement lump sum (tax-free cash), from Pru

kuratowski

PdPaul said:

LISA is of no use to me as far as I know.

A S&S LISA is actually a pretty useful alternative to the SIPP, as it has a separate allowance so very useful for high earners who are up against Annual Allowance and/or Lifetime Allowance limits.  The boost of 25% from the government bonus, assuming you hold until age 60, makes this more beneficial than an equivalent £4k in a SIPP given the LTA charge.

Never looked at state pension, why would this matter..

It's an index-linked, government underwritten defined benefit pension and you can get it for a song...

PdPaul

Ok that's the interest only mortgage idea binned. I didn't know it had a limit of tax free cash. Thanks for that. 

elouise01582

A LISA gets a 25% uplift from the Government and you can take money from it for retirement purposes from age 60 - It's not just for buying a house.

PdPaul

But the LISA funds come from my own pocket, I'd rather put that into a normal Stocks and Shares ISA and make more than the government would give me at 60. 

RacingDriver

PdPaul said:

But the LISA funds come from my own pocket, I'd rather put that into a normal Stocks and Shares ISA and make more than the government would give me at 60. 

You can invest in the same things in a LISA as an ISA just with the £1k Government bonus.