PCLS - All £268,275 from One of Two Pensions?

xylophone

You could check but I'd say you are clutching at straws.

The DB scheme is now a closed scheme and therefore you have a deferred pension in that scheme.

You have an entitlement under the rules of that scheme.

 It seems that the workplace pension now offered is a  separate and unconnected  DC scheme and you are not currently a member.

If you become a member, you will be able to access the pension you accrue via Aegon's administrative system (or you could transfer out to another scheme, perhaps  your own SIPP).

According to HMRC

PCLS condition: entitlement to pension

Section 166(2)(a) and paragraph 1(1)(aa) schedule 29 Finance Act 2004

The lump sum must be connected to an arising entitlement to a ‘relevant pension’ benefit under the same registered pension scheme. 

 

RogerPensionGuy

This is a nice output here and at time point 4Mins & 50Secs mentions some potential tax-free possibilities that haven't been confirmed yet and of interest for this thread.

The whole video is good and I fund all his outputs good stuff.

https://m.youtube.com/watch?v=wJBTItv5JSM&feature=youtu.be

dunstonh

dodmwe said:

dunstonh said:

I can then transfer my personal pension from Aviva to Aegeon who operate my employers scheme. Is it possible that even though even though the employer DB and employer DC are separate schemes, they fall under my employers umbrella, and therefore may be more flexible on TFLS, or am I clutching at straws? 

Clutching at straws.

The majority of DB schemes dont allow PCLS to be paid from linked DC schemes to begin with and where they do, it is in the linked AVC or legacy DC scheme.      Where it is a closed DB scheme with an unrelated master trust pension (which most Aegon workplace pensions are), then there is no link between the schemes.

You can ask the question but expect to be told no.

Thanks for this.

Am I right in thinking HMRC would allow this flexibility as long as you don’t breach the £268,275 TFLS (or there is nothing in HMRCs rules that does not allow this), but it is the pension schemes themselves that restrict this flexibility?

The pension rules allow the tax free cash to be taken from another scheme.   However, no pension provider does it due to the complexity of sorting it out.  It only exists on a very small number of occupational pensions where multiple schemes are handled via the same administrator and are linked.

Albermarle

RogerPensionGuy said:

This is a nice output here and at time point 4Mins & 50Secs mentions some potential tax-free possibilities that haven't been confirmed yet and of interest for this thread.

The whole video is good and I fund all his outputs good stuff.

https://m.youtube.com/watch?v=wJBTItv5JSM&feature=youtu.be

Thanks for that, very interesting. My prediction is that that the LTA will not be reinstated but the 100% IHT exemption will not survive ( and he seems to agree ) .

Albermarle

Regarding the OP's question - to modify it a little.

If you have already taken a DB pension of say £20k pa but no lump sum/tax free cash - so contributing £400K to LTA.
You also have a DC pot of £700K , so in theory at least you are just over the LTA, so not really worth contributing anymore ( ignoring employer contributions etc ) .
However with LTA abolished it would be worth at least increasing your DC pot to ay least £1070,000 ,if possible of course,  so you could get the maximum 25% tax free cash out ( as you did not take any from the DB scheme) 

Does that make sense ? although until the finance bill is published I guess nothing will be certain.

dunstonh

Albermarle said:

RogerPensionGuy said:

This is a nice output here and at time point 4Mins & 50Secs mentions some potential tax-free possibilities that haven't been confirmed yet and of interest for this thread.

The whole video is good and I fund all his outputs good stuff.

https://m.youtube.com/watch?v=wJBTItv5JSM&feature=youtu.be

Thanks for that, very interesting. My prediction is that that the LTA will not be reinstated but the 100% IHT exemption will not survive ( and he seems to agree ) .

I cannot see Labour bringing the LTA back.     You already have the Teachers, Fire brigade and police representatives saying that they should be exempt as well.   There are also nurses that are on track to hit the LTA.    So, exempting doctors but not nurses would not go down well.

In fact, if you look at the groups that are striking or have recently gone on strike, they all have employees that are already hitting or on track to hit the LTA and are traditionally more likely to support Labour.

Like you, I do fear for the IHT exemption.  However, that would be an opportunistic tax grab by Labour.    Prior to the pension freedoms, the insurance company got the money for pensions in payment and the pension was tax free if it hadn't got to that stage yet (which was required by age 75).   So, this wouldn't be a tweak but a brand new tax.  It didn't appear to be at risk under Conservative as it has been a way to increase the inherited assets that were not chargeable to IHT without risking a backlash from Labour and those that think it's a sin to have wealth.  And it didn't cost anything to the Treasury as it has never been taxed before.

Pat38493

dunstonh said:

Like you, I do fear for the IHT exemption.  However, that would be an opportunistic tax grab by Labour.    Prior to the pension freedoms, the insurance company got the money for pensions in payment and the pension was tax free if it hadn't got to that stage yet (which was required by age 75).   So, this wouldn't be a tweak but a brand new tax.  It didn't appear to be at risk under Conservative as it has been a way to increase the inherited assets that were not chargeable to IHT without risking a backlash from Labour and those that think it's a sin to have wealth.  And it didn't cost anything to the Treasury as it has never been taxed before.

On the flip side the pension freedoms and the demise of a good portion of the DB pension schemes, means that a much larger of people have a DC pot in future.

Further, the new DC based system encourages anyone who actually takes the time to understand it, to save up significantly more money than they will probably need for retirement - by human nature people are going to be more fearful of running out of money than having too much when they are unable to work anymore, so many people will save up enough to cope with the worst case scenario, which means 99% chance they have saved too much and lots of money sloshing around?

If you are running an insurance company or a pension provider, your risk is per definition spread over all the people with their different retirement dates - as an individual we have to take the entire sequence of return risks on ourselves.

Linton

No problem with having wealth, the issue is surely loopholes in a pension system which is intended for people to enjoy financial security in their and their spouse's old age being used for tax avoidance beyond their death.     LTA is a very crude way of making that more difficult. Perhaps the Treasury will come up with something better.