Maximum tax free lump sum with Certificate for Fixed Protection

Ernie7

I have a Certificate for Fixed Protection issued in 2012 entitling me to a lifetime allowance of £1.8m. I'm not sure whether that affects my Lump Sum Allowance? Any advice would be really appreciated.

My details are as follows:

• I have unit linked personal pension plans with a combined transfer value of £1,195,000. No GARs. I haven't drawn anything from them.

• I am entitled to a final salary pension that I haven't commenced drawing. This offers a pension of £11,100 pa. Alternatively, I can have a lump sum of £50,000 and a reduced pension of £7500 pa. (The commutation factor is £14 lump sum for each £1 of pension given up, and I'm age 72.)
• I am currently in receipt of a pension from a different employment that pays  £1200pa. This commenced 12 years ago. The lump sum was £3500.

I have no other pensions apart from the state pension.

The lump sum available from the personal pensions (at 25%) would be £299,000. Together with the lump sum from the final salary pension, the total would be £349,000, which is obviously in excess of the standard LSA of £268,275

Marcon

See https://adviser.royallondon.com/technical-central/pensions/benefit-options/fixed-protection/ for a useful overview (and an answer to your question!).

Ernie7

Marcon said:

See https://adviser.royallondon.com/technical-central/pensions/benefit-options/fixed-protection/ for a useful overview (and an answer to your question!).

Thanks, that was quick!

To summarise, I can take up to £450k lump sum tax free, but this is limited to 25% of my personal pensions plus whatever the DB scheme offers?

DRS1

Won't the pension you are currently receiving have used up part of your allowance?

The lump sum for that one looks like it might be low so I am not sure if you are a candidate for a Transitional Tax Free Amount Certificate.  It may be you don't need one but you would have to do some sums to see how much of the £450k is left.

Ernie7

 I have now unearthed the paperwork for the small pension that commenced 12 years ago. This shows that I actually received a lump sum of £6356 (not the figure above), which is 25% of the Lifetime Allowance Value of £25,426. Does this mean that there's no point at all in applying for a Transitional Tax Free Amount Certificate?

Am I right that my maximum remaining lump sum entitlement is £450k minus the £6356? In practice, that looks like plenty, as the DB and DC  lump sums combined are around £350k.