Detail of LTA abolition published

Pat38493

This was just mentioned on another thread but there should probably be a dedicated thread for this topic.

Abolition of the Lifetime Allowance (LTA) - GOV.UK (www.gov.uk)

I have only skimmed through this so far - can anyone figure out whether in the end, this means that taking a Defined Benefit pension without PCLS, will no longer reduce the amount of tax free cash you could take from DC pensions.  So you could put your DB pension in payment first, and then still take £268K out of DC?

Any other significant implications hidden in the small print?

Albermarle

Pat38493 said:

This was just mentioned on another thread but there should probably be a dedicated thread for this topic.

Abolition of the Lifetime Allowance (LTA) - GOV.UK (www.gov.uk)

I have only skimmed through this so far - can anyone figure out whether in the end, this means that taking a Defined Benefit pension without PCLS, will no longer reduce the amount of tax free cash you could take from DC pensions.  So you could put your DB pension in payment first, and then still take £268K out of DC?

Any other significant implications hidden in the small print?

I am interested in this as I put a DB scheme into payment a couple of years ago and did not take the tax free lump sum, which would have been about £70K.
Currently my DC total is not big enough to take £268K from it tax free, but hopefully it might be at some point, assuming that £268K limit stays in place for a few years. ( and the markets have good positive run) 

I have skimmed through the above. It seems that it should be OK to take the full £268K, as it seems that the previous reference to LTA % will not apply anymore. However there is no definitive answer as far as I can see, and not being a pensions lawyer, it is not the easiest of reads. 
Luckily I have the time to sit tight until all is fully clear at some point.

EDIT  IN the other thread it has been interpreted differently, which could well be correct.

Pat38493

Albermarle said:

Pat38493 said:

This was just mentioned on another thread but there should probably be a dedicated thread for this topic.

Abolition of the Lifetime Allowance (LTA) - GOV.UK (www.gov.uk)

I have only skimmed through this so far - can anyone figure out whether in the end, this means that taking a Defined Benefit pension without PCLS, will no longer reduce the amount of tax free cash you could take from DC pensions.  So you could put your DB pension in payment first, and then still take £268K out of DC?

Any other significant implications hidden in the small print?

I am interested in this as I put a DB scheme into payment a couple of years ago and did not take the tax free lump sum, which would have been about £70K.
Currently my DC total is not big enough to take £268K from it tax free, but hopefully it might be at some point, assuming that £268K limit stays in place for a few years. ( and the markets have good positive run) 

I have skimmed through the above. It seems that it should be OK to take the full £268K, as it seems that the previous reference to LTA % will not apply anymore. However there is no definitive answer as far as I can see, and not being a pensions lawyer, it is not the easiest of reads. 
Luckily I have the time to sit tight until all is fully clear at some point.

EDIT  IN the other thread it has been interpreted differently, which could well be correct.

I was watching this video that was posted on another thread:
https://www.youtube.com/watch?v=yiJGV9cvCeU

A few things was confirmed in this video:
- Yes you can take the full £268K in future from your SIPP, even if you have put a large DB pension into payment with taking no PCLS, or a small PCLS less than the maximum.
- If you have taken a large DB pension in the past, without PCLS or with less than the equivalent full allowed  PCLS, the latest draft of the legislation includes the ability to apply for an certificate from the pension provider which could allow you to retrospectively gain the ability to take the tax free full lump sum from a SIPP.  The presenter said that there has not yet been guidelines about what evidence is needed to get such a certificate.  This could be useful for people who took a large DB pension in the past without PCLS and now have a DC pot.  Albermarle it sounds like this might be of interest to you?
- The ability to take the whole pension tax free to the beneficiary if the person dies before 75 has been reinstated (after threated to be removed in the first version).
- The loophole that appeared to allow you to take up to the full old LTA amount tax free on death after 75 was removed - this was a mistake in the first version apparently.

MK62

Albermarle said:

Pat38493 said:

This was just mentioned on another thread but there should probably be a dedicated thread for this topic.

Abolition of the Lifetime Allowance (LTA) - GOV.UK (www.gov.uk)

I have only skimmed through this so far - can anyone figure out whether in the end, this means that taking a Defined Benefit pension without PCLS, will no longer reduce the amount of tax free cash you could take from DC pensions.  So you could put your DB pension in payment first, and then still take £268K out of DC?

Any other significant implications hidden in the small print?

I am interested in this as I put a DB scheme into payment a couple of years ago and did not take the tax free lump sum, which would have been about £70K.
Currently my DC total is not big enough to take £268K from it tax free, but hopefully it might be at some point, assuming that £268K limit stays in place for a few years. ( and the markets have good positive run) 

I have skimmed through the above. It seems that it should be OK to take the full £268K, as it seems that the previous reference to LTA % will not apply anymore. However there is no definitive answer as far as I can see, and not being a pensions lawyer, it is not the easiest of reads. 
Luckily I have the time to sit tight until all is fully clear at some point.

EDIT  IN the other thread it has been interpreted differently, which could well be correct.

The way I interpreted it, is that your LSA will be reduced by 25% of the amount of LTA you've already used, unless you have "full records" which would enable you to apply for this new transitional certificate ......the devil though, may well be in the detail of what exactly "full records" means, as it would seem in your case that this certificate would be highly desirable. However, it appears no details have been published on this yet (and we're just a little over 3 months away from this coming into force......🙄).

Albermarle

Pat38493 said:

Albermarle said:

Pat38493 said:

This was just mentioned on another thread but there should probably be a dedicated thread for this topic.

Abolition of the Lifetime Allowance (LTA) - GOV.UK (www.gov.uk)

I have only skimmed through this so far - can anyone figure out whether in the end, this means that taking a Defined Benefit pension without PCLS, will no longer reduce the amount of tax free cash you could take from DC pensions.  So you could put your DB pension in payment first, and then still take £268K out of DC?

Any other significant implications hidden in the small print?

I am interested in this as I put a DB scheme into payment a couple of years ago and did not take the tax free lump sum, which would have been about £70K.
Currently my DC total is not big enough to take £268K from it tax free, but hopefully it might be at some point, assuming that £268K limit stays in place for a few years. ( and the markets have good positive run) 

I have skimmed through the above. It seems that it should be OK to take the full £268K, as it seems that the previous reference to LTA % will not apply anymore. However there is no definitive answer as far as I can see, and not being a pensions lawyer, it is not the easiest of reads. 
Luckily I have the time to sit tight until all is fully clear at some point.

EDIT  IN the other thread it has been interpreted differently, which could well be correct.

I was watching this video that was posted on another thread:
https://www.youtube.com/watch?v=yiJGV9cvCeU

A few things was confirmed in this video:
- Yes you can take the full £268K in future from your SIPP, even if you have put a large DB pension into payment with taking no PCLS, or a small PCLS less than the maximum.
- If you have taken a large DB pension in the past, without PCLS or with less than the equivalent full allowed  PCLS, the latest draft of the legislation includes the ability to apply for an certificate from the pension provider which could allow you to retrospectively gain the ability to take the tax free full lump sum from a SIPP.  The presenter said that there has not yet been guidelines about what evidence is needed to get such a certificate.  This could be useful for people who took a large DB pension in the past without PCLS and now have a DC pot.  Albermarle it sounds like this might be of interest to you?
- The ability to take the whole pension tax free to the beneficiary if the person dies before 75 has been reinstated (after threated to be removed in the first version).
- The loophole that appeared to allow you to take up to the full old LTA amount tax free on death after 75 was removed - this was a mistake in the first version apparently.

Thanks for that. I did see the post with the video, but have not got around to watching as the OP said it was heavy going. I will put some time aside this afternoon.

The 75 Year rule still seems illogical to me. Everything tax free for the beneficiary or nothing tax free, not even unused tax free cash, depending on when you die. Where is the sense in that ?

Albermarle

MK62 said:

Albermarle said:

Pat38493 said:

This was just mentioned on another thread but there should probably be a dedicated thread for this topic.

Abolition of the Lifetime Allowance (LTA) - GOV.UK (www.gov.uk)

I have only skimmed through this so far - can anyone figure out whether in the end, this means that taking a Defined Benefit pension without PCLS, will no longer reduce the amount of tax free cash you could take from DC pensions.  So you could put your DB pension in payment first, and then still take £268K out of DC?

Any other significant implications hidden in the small print?

I am interested in this as I put a DB scheme into payment a couple of years ago and did not take the tax free lump sum, which would have been about £70K.
Currently my DC total is not big enough to take £268K from it tax free, but hopefully it might be at some point, assuming that £268K limit stays in place for a few years. ( and the markets have good positive run) 

I have skimmed through the above. It seems that it should be OK to take the full £268K, as it seems that the previous reference to LTA % will not apply anymore. However there is no definitive answer as far as I can see, and not being a pensions lawyer, it is not the easiest of reads. 
Luckily I have the time to sit tight until all is fully clear at some point.

EDIT  IN the other thread it has been interpreted differently, which could well be correct.

The way I interpreted it, is that your LSA will be reduced by 25% of the amount of LTA you've already used, unless you have "full records" which would enable you to apply for this new transitional certificate ......the devil though, may well be in the detail of what exactly "full records" means, as it would seem in your case that this certificate would be highly desirable. However, it appears no details have been published on this yet (and we're just a little over 3 months away from this coming into force......🙄).

Well I have all the paperwork, as it was only put into payment a couple of years ago.
My main worry is that the administrator is Mercer, where speed is definitely not of the essence !
Luckily I am not quite at the stage to take TFC from the DC pots just yet, so time to see how it all pans out,

Pat38493

Albermarle said:

Pat38493 said:

Albermarle said:

Pat38493 said:

This was just mentioned on another thread but there should probably be a dedicated thread for this topic.

Abolition of the Lifetime Allowance (LTA) - GOV.UK (www.gov.uk)

I have only skimmed through this so far - can anyone figure out whether in the end, this means that taking a Defined Benefit pension without PCLS, will no longer reduce the amount of tax free cash you could take from DC pensions.  So you could put your DB pension in payment first, and then still take £268K out of DC?

Any other significant implications hidden in the small print?

I am interested in this as I put a DB scheme into payment a couple of years ago and did not take the tax free lump sum, which would have been about £70K.
Currently my DC total is not big enough to take £268K from it tax free, but hopefully it might be at some point, assuming that £268K limit stays in place for a few years. ( and the markets have good positive run) 

I have skimmed through the above. It seems that it should be OK to take the full £268K, as it seems that the previous reference to LTA % will not apply anymore. However there is no definitive answer as far as I can see, and not being a pensions lawyer, it is not the easiest of reads. 
Luckily I have the time to sit tight until all is fully clear at some point.

EDIT  IN the other thread it has been interpreted differently, which could well be correct.

I was watching this video that was posted on another thread:
https://www.youtube.com/watch?v=yiJGV9cvCeU

A few things was confirmed in this video:
- Yes you can take the full £268K in future from your SIPP, even if you have put a large DB pension into payment with taking no PCLS, or a small PCLS less than the maximum.
- If you have taken a large DB pension in the past, without PCLS or with less than the equivalent full allowed  PCLS, the latest draft of the legislation includes the ability to apply for an certificate from the pension provider which could allow you to retrospectively gain the ability to take the tax free full lump sum from a SIPP.  The presenter said that there has not yet been guidelines about what evidence is needed to get such a certificate.  This could be useful for people who took a large DB pension in the past without PCLS and now have a DC pot.  Albermarle it sounds like this might be of interest to you?
- The ability to take the whole pension tax free to the beneficiary if the person dies before 75 has been reinstated (after threated to be removed in the first version).
- The loophole that appeared to allow you to take up to the full old LTA amount tax free on death after 75 was removed - this was a mistake in the first version apparently.

Thanks for that. I did see the post with the video, but have not got around to watching as the OP said it was heavy going. I will put some time aside this afternoon.

The 75 Year rule still seems illogical to me. Everything tax free for the beneficiary or nothing tax free, not even unused tax free cash, depending on when you die. Where is the sense in that ?

The bit where they talk about the new certificate that will be obtainable is near the end - I think it's in the last 5 minutes or so of the presentation.

tiring33

Excellent video. The explanation of transitional calculations and the rules around getting a 'Transitional Tax Free Amount Certificate' start at minute 42.

The PCLS I took at the commencement of my DB pension was less than 25% of it's LTA value, so I shall be seeking a certificate (post 6th April '24) to ensure I can use the full LSA when withdrawing the remaining tax free element of my DC pension.

I expect some admin delays whilst my DB and DC pension providers work out how these certificates will be produced and verified, so I expect some patience may be required! 

Albermarle

I expect some admin delays whilst my DB and DC pension providers work out how these certificates will be produced and verified, so I expect some patience my be required! 

Yes, if you are in this situation probably best not take any tax free cash from your DC pensions if you do not really need to. Just to let the new system settle down !

That is my plan anyway.

Albermarle

Pat38493 said:

Albermarle said:

Pat38493 said:

Albermarle said:

Pat38493 said:

This was just mentioned on another thread but there should probably be a dedicated thread for this topic.

Abolition of the Lifetime Allowance (LTA) - GOV.UK (www.gov.uk)

I have only skimmed through this so far - can anyone figure out whether in the end, this means that taking a Defined Benefit pension without PCLS, will no longer reduce the amount of tax free cash you could take from DC pensions.  So you could put your DB pension in payment first, and then still take £268K out of DC?

Any other significant implications hidden in the small print?

I am interested in this as I put a DB scheme into payment a couple of years ago and did not take the tax free lump sum, which would have been about £70K.
Currently my DC total is not big enough to take £268K from it tax free, but hopefully it might be at some point, assuming that £268K limit stays in place for a few years. ( and the markets have good positive run) 

I have skimmed through the above. It seems that it should be OK to take the full £268K, as it seems that the previous reference to LTA % will not apply anymore. However there is no definitive answer as far as I can see, and not being a pensions lawyer, it is not the easiest of reads. 
Luckily I have the time to sit tight until all is fully clear at some point.

EDIT  IN the other thread it has been interpreted differently, which could well be correct.

I was watching this video that was posted on another thread:
https://www.youtube.com/watch?v=yiJGV9cvCeU

A few things was confirmed in this video:
- Yes you can take the full £268K in future from your SIPP, even if you have put a large DB pension into payment with taking no PCLS, or a small PCLS less than the maximum.
- If you have taken a large DB pension in the past, without PCLS or with less than the equivalent full allowed  PCLS, the latest draft of the legislation includes the ability to apply for an certificate from the pension provider which could allow you to retrospectively gain the ability to take the tax free full lump sum from a SIPP.  The presenter said that there has not yet been guidelines about what evidence is needed to get such a certificate.  This could be useful for people who took a large DB pension in the past without PCLS and now have a DC pot.  Albermarle it sounds like this might be of interest to you?
- The ability to take the whole pension tax free to the beneficiary if the person dies before 75 has been reinstated (after threated to be removed in the first version).
- The loophole that appeared to allow you to take up to the full old LTA amount tax free on death after 75 was removed - this was a mistake in the first version apparently.

Thanks for that. I did see the post with the video, but have not got around to watching as the OP said it was heavy going. I will put some time aside this afternoon.

The 75 Year rule still seems illogical to me. Everything tax free for the beneficiary or nothing tax free, not even unused tax free cash, depending on when you die. Where is the sense in that ?

The bit where they talk about the new certificate that will be obtainable is near the end - I think it's in the last 5 minutes or so of the presentation.

Just listened to that part. Does seem quite encouraging, although the details seem not fully firmed up yet, so not going to count my chickens just yet. In any case my DC pots are not big enough to take advantage of it, but they might be one day assuming this tax free limit does not go up anytime soon and some investments growth in the meantime.