Pension help please

billozz

Could someone explain the last paragraph please.
Thank you

Brie

If you have lots of money and lots of it in pensions then the lifetime allowance is something you have to concern yourself about as you are not allowed to exceed it.  I think it's something like £1.7million (happy to be corrected!) 

But you have used only a tiddly 6.58% of your LA.  You just need to keep a note of that in case you are applying for another pension to be paid out.  

Hoenir

Link below

https://www.gov.uk/tax-on-your-private-pension/lifetime-allowance

Albermarle

billozz said:

Could someone explain the last paragraph please.
Thank you

There was a limit on how big your pensions were. and you paid extra tax if they were bigger ( simplified explanation !) Your pension represents 6.58% of the limit only. In any case it is in the process of being abolished.

billozz

Albermarle said:

billozz said:

Could someone explain the last paragraph please.
Thank you

There was a limit on how big your pensions were. and you paid extra tax if they were bigger ( simplified explanation !) Your pension represents 6.58% of the limit only. In any case it is in the process of being abolished.

Thanks for the info, does the£70,000 represent the pot that is available?

xylophone

Thanks for the info, does the£70,000 represent the pot that is available?

Presumably yours is a DB pension.  See

https://www.moneyhelper.org.uk/en/pensions-and-retirement/building-your-retirement-pot/lifetime-allowance-for-pension-savings

Defined benefit pension schemes

• For defined benefit pension schemes, you normally calculate the total value by multiplying your expected annual pension by 20.
• You also need to add the amount of any separate tax-free cash lump sum.

For example, if the annual pension you will receive is £15,000 a year and you will get a tax-free lump sum of £30,000 as well, the value of that pension for lifetime allowance purposes is £330,000 ((20 x £15,000) + £30,000).  

QrizB

xylophone said:

Thanks for the info, does the£70,000 represent the pot that is available?

Presumably yours is a DB pension.  See

https://www.moneyhelper.org.uk/en/pensions-and-retirement/building-your-retirement-pot/lifetime-allowance-for-pension-savings

Defined benefit pension schemes

• For defined benefit pension schemes, you normally calculate the total value by multiplying your expected annual pension by 20.
• You also need to add the amount of any separate tax-free cash lump sum.

For example, if the annual pension you will receive is £15,000 a year and you will get a tax-free lump sum of £30,000 as well, the value of that pension for lifetime allowance purposes is £330,000 ((20 x £15,000) + £30,000).  

... and £2647.90 x 20 plus £17652.65 equals £70610.65.

(Edited for fat fingers.)

billozz

xylophone said:

Thanks for the info, does the£70,000 represent the pot that is available?

Presumably yours is a DB pension.  See

https://www.moneyhelper.org.uk/en/pensions-and-retirement/building-your-retirement-pot/lifetime-allowance-for-pension-savings

Defined benefit pension schemes

• For defined benefit pension schemes, you normally calculate the total value by multiplying your expected annual pension by 20.
• You also need to add the amount of any separate tax-free cash lump sum.

For example, if the annual pension you will receive is £15,000 a year and you will get a tax-free lump sum of £30,000 as well, the value of that pension for lifetime allowance purposes is £330,000 ((20 x £15,000) + £30,000).  

Thank you, is there ever a way to extract the pot? Is there a pot as such?

Silvertabby

There was never a 'pot' - just a promise to pay a set amount of pension.

Assuming it's not a public sector pension, you may have been able to transfer your benefits to another scheme, which in turn would allow you to draw it out as a (mostly taxed) lump sum, but that boat has sailed for many reasons.

af1963

The £70K is the estimated "value" of your total benefits from this pension - £17K lump sum, plus £2647 annual pension for life.  It's not a pot of money. Just a way to compare your pension benefits with the maximum that was  ( until recently) allowed without incurring an extra tax charge.