LTA Basics

jamesd

To me that looks like a good plan, but I may be a little biased.

zagfles

MallyGirl said:

Thank you to everyone who has contributed to this thread.
The worked examples really helped to get my head around it all such that the advisor based website articles on the subject now make more sense.
My plan for 'im indoors is now to crystallise the full amount of his SIPP/personal pensions at 55, putting the TFLS cash into ISAs and probably premium bonds initially. This will entail a transfer from 2 old DC pensions into the SIPP and I might leave them as cash for the few months till he hits 55 just to keep the valuation down overall - they are 100% equity at the moment but will have to transfer as cash.
He will continue the workplace pension £40k contribution ongoing for at least a couple more years now that I understand what to monitor. We'll leave enough headroom to make sure he can always get the employer matched contribution aka free money and keep an eye on the 100k salary possibility.
At retirement he will withdraw just under the 40% threshold, adjusting once full SP kicks in at 67. This should avoid falling foul of the crystallised growth test at 75 (subject to loads of assumptions). I will take just under the 20% threshold, pay no tax and do the £3,600 shimmy.
Us both hitting 59 is also the first year beyond the current fix of LTA amount so there might be a bit of wiggle room by then when he crystallises most/all of the workplace pension after hanging up his mouse.
After 75 we can adjust my withdrawals up into 20% tax and take his down a bit to even things out (financially neutral).

We are still looking at the lumpy sal sac options, and associated NI savings, to see what his employer will support - he definitely can't change the pension contributions adhoc like I can.

Another possibility to bear in mind is deferring the state pension if good performance looks like it might result hitting the age 75 test on crystallised growth. By deferring you get another £9.5k or so pa you can withdraw in the basic rate band. It's often a good idea to defer for a few years anyway regardless of the LTA, but it may be worth deferring a few more if the age 75 test will be an issue.

zagfles

Dead_keen said:

Just as a comparison, my P11D benefit was £1,575 for health insurance (two of us, plus two kids under 25) and last week I was quoted continutation cover for £4,622.48.  This was with "70% No Claims Discount" for me and 63.5% for my partner and a £100 excess.  By limiting the cover even more (narrow group of hospitals, no physio, no mental health cover, etc) the cheapest it got to was £3,660.77. 

The way that their no claims discount works suggests to me that the reality is that you would do you utmost not to claim unless it was very serious (the gross amount would be something like £15,000 per year, with no NCD, before they take account of whatever you claimed for).  

In our scheme some people get medical insurance as part of their remuneration package, and others don't but choose to buy it through sal sac. For the former everyone's P11D is the same amount, but for the latter it depends on age, the younger you are the cheaper it is. For younger employees it can be better not to have it as a company benefit but buy it through sal sac!

So I suspect that's the reason for the difference, it didn't used to account for age, but when you opt to buy it, it does.

MallyGirl

zagfles said:

Another possibility to bear in mind is deferring the state pension if good performance looks like it might result hitting the age 75 test on crystallised growth. By deferring you get another £9.5k or so pa you can withdraw in the basic rate band. It's often a good idea to defer for a few years anyway regardless of the LTA, but it may be worth deferring a few more if the age 75 test will be an issue.

Yes - I have a comment about that on the relevant cells in the spreadsheet. It might make all the difference

MallyGirl

Fallen at the first hurdle on the plan. OH asked ii to initiate transfer in of his remaining 2 pensions that sit outside of the growing workplace one. Sun Life of Canada, who operate both, have rejected the transfer request on the grounds that they have both already been transferred out.
They have not! I think we would have noticed if we had done that.
I knew it would be painful as SLoC have always been difficult/slow but this is worse than I expected.

cfw1994

Curious  👀
Did they manage to suggest where they thought they had been transferred out to 🧐

MallyGirl

That is a conversation OH is trying to have with SLoC.

MallyGirl

Will be glad when we are free from SLoC - they have given me a few more grey hairs today.

In response to OH questioning why they told ii that the pensions had been transferred out they said "because they have".
Cue some searching of emails and documents to back up that OH had not transferred them so now £350k is 'missing'.

OH called them back and this time they said "because they have been transferred and the letters sent this week" so in fact the funds are not lost, they have actioned the request from ii despite telling ii that they couldn't and now I can have a stiff gin.

savingholmes

Interesting thread. Glad they found the missing money