TFLS withdrawal before Autumn budget

Grumpy_chap

Steve182 said:

If the limit is increased again to >£268K by next government, great, my new pension contributions after the withdrawal will qualify for 25% TFLS.

Possibly.

A future increase in the absolute value of the TFLS may be only available to those with remaining TFLS percentage available.

I am not sure if that is clear, so I will try to expand.

Current TFLS £268k.  An individual draws £134k which is 50% so potentially has another 50% £134k available to draw in the future.
Future TFLS £500k.  An individual who already took £134k (50% of current TFLS) may be restricted to 50% of future TFLS, so only another £250k available.  NOT the £500k - £134k = £366k.

Individual who already took the full 100% £268k may not get anything from an increase in TFLS if the percentage is capped.

Could be done like that.
Could be done some other way.
No-one can be certain - it is all speculation.

RogerPensionGuy

Grumpy_chap said:

Steve182 said:

If the limit is increased again to >£268K by next government, great, my new pension contributions after the withdrawal will qualify for 25% TFLS.

Possibly.

A future increase in the absolute value of the TFLS may be only available to those with remaining TFLS percentage available.

I am not sure if that is clear, so I will try to expand.

Current TFLS £268k.  An individual draws £134k which is 50% so potentially has another 50% £134k available to draw in the future.
Future TFLS £500k.  An individual who already took £134k (50% of current TFLS) may be restricted to 50% of future TFLS, so only another £250k available.  NOT the £500k - £134k = £366k.

Individual who already took the full 100% £268k may not get anything from an increase in TFLS if the percentage is capped.

Could be done like that.
Could be done some other way.
No-one can be certain - it is all speculation.

Good points here. 

I was keeping 30% of my 268K allowance in reserve and hoping it grow tax efficiently for all the good housekeeping reasons, but now decided to pull the plug and I will of used 100% of the LSDBA any day now.

Doing the above has probably inspired me to get an annuity or two, plus the annuity rates feel nice. 

My research appears to say if a person took 100% TFLS when it was 1M/250K under the LTA and now they have sufficient uncrystallised funds, they can indeed take 25% of that 73.1K. 

It's all very confusing unfortunately. 

The link below is a nice read before bed tonight. 

***

Lifetime allowance (for historic reference) https://share.google/rXrcB8UGA3v7utq5u

Cobbler_tone

Grumpy_chap said:

Steve182 said:

If the limit is increased again to >£268K by next government, great, my new pension contributions after the withdrawal will qualify for 25% TFLS.

Possibly.

A future increase in the absolute value of the TFLS may be only available to those with remaining TFLS percentage available.

I am not sure if that is clear, so I will try to expand.

Current TFLS £268k.  An individual draws £134k which is 50% so potentially has another 50% £134k available to draw in the future.
Future TFLS £500k.  An individual who already took £134k (50% of current TFLS) may be restricted to 50% of future TFLS, so only another £250k available.  NOT the £500k - £134k = £366k.

Individual who already took the full 100% £268k may not get anything from an increase in TFLS if the percentage is capped.

Could be done like that.
Could be done some other way.
No-one can be certain - it is all speculation.

Wow, that is taking over thinking speculation to the next level! 

It is a good example of why you should do nothing, unless you were already doing it of course. There will be winners and losers in any change, which is famously inevitable....apart from maybe the TFLS this time around 
 
Author Arnold Bennett once said “Any change, even a change for the better, is always accompanied by drawbacks and discomforts.”  
Kakuzo Okakura “The art of life lies in a constant readjustment to our surroundings.” 

Steve182

jimjames said:

Steve182 said:

I've decided to withdraw all of mine, and do a bit of recycling, well below the allowable limit, to take full advantage of the £268K allowance in case it's reduced, which I fear it will be.

I'm sure the government will appreciate you moving money from being tax free to potentially taxable. What are you planning to do with it once it's outside the pension?

I don't intend to pay a penny of tax on it. I can pay down mortgage, invest in ISAs, put some in wife's pension, recycle 29% back into my pension (taking 25% TFLS off that lump too) open a kids ISA for my son and invest some in non divi paying shares in a dealing account while being careful not to realise > £3K capital gain per year

Steve182

Grumpy_chap said:

Steve182 said:

If the limit is increased again to >£268K by next government, great, my new pension contributions after the withdrawal will qualify for 25% TFLS.

Possibly.

A future increase in the absolute value of the TFLS may be only available to those with remaining TFLS percentage available.

I am not sure if that is clear, so I will try to expand.

Current TFLS £268k.  An individual draws £134k which is 50% so potentially has another 50% £134k available to draw in the future.
Future TFLS £500k.  An individual who already took £134k (50% of current TFLS) may be restricted to 50% of future TFLS, so only another £250k available.  NOT the £500k - £134k = £366k.

Individual who already took the full 100% £268k may not get anything from an increase in TFLS if the percentage is capped.

Could be done like that.
Could be done some other way.
No-one can be certain - it is all speculation.

Thanks GT, this sort of reply is exactly what I was hoping for!

I always thought that if they ever increased TFLS allowance in the future it would be a ££ rather than % increase, so if I'd used £268K and it went up to £500 I'd have £232K left. In reality any increase may not apply to those already "maxed out" like me. Excellent point!

Lets consider a couple of scenarios.

1. I pull out none or £100K TFLS this month. In November the TFLS limit drops from £268K to 100K. By not withdrawing I will have effectively lost 40% of £168K so £67K loss

Taking the senario that you kindly described 

I take out all my £268K TFLS this year, but there are no changes until the next government comes in, and in 5 years time when I retire the TFLS cap has increased to £500K or more, but I have used all mine.

What do I stand to lose? Well my pension contributions in 5 years are £80K, lets assume with growth that's £120K in 5 years. 40% of £120K is £48K

So £67K and £48K are not miles apart. BUT, in the next 5 years, my timeframe for TFLS withdrawal, I think the chances of a TFLS allowance being slashed are much greater than it being increased.

Good food for thought....thanks again for sharing that

Steve182

RogerPensionGuy said:

Grumpy_chap said:

Steve182 said:

If the limit is increased again to >£268K by next government, great, my new pension contributions after the withdrawal will qualify for 25% TFLS.

Possibly.

A future increase in the absolute value of the TFLS may be only available to those with remaining TFLS percentage available.

I am not sure if that is clear, so I will try to expand.

Current TFLS £268k.  An individual draws £134k which is 50% so potentially has another 50% £134k available to draw in the future.
Future TFLS £500k.  An individual who already took £134k (50% of current TFLS) may be restricted to 50% of future TFLS, so only another £250k available.  NOT the £500k - £134k = £366k.

Individual who already took the full 100% £268k may not get anything from an increase in TFLS if the percentage is capped.

Could be done like that.
Could be done some other way.
No-one can be certain - it is all speculation.

Good points here. 

I was keeping 30% of my 268K allowance in reserve and hoping it grow tax efficiently for all the good housekeeping reasons, but now decided to pull the plug and I will of used 100% of the LSDBA any day now.

Doing the above has probably inspired me to get an annuity or two, plus the annuity rates feel nice. 

My research appears to say if a person took 100% TFLS when it was 1M/250K under the LTA and now they have sufficient uncrystallised funds, they can indeed take 25% of that 73.1K. 

It's all very confusing unfortunately. 

The link below is a nice read before bed tonight. 

***

Lifetime allowance (for historic reference) https://share.google/rXrcB8UGA3v7utq5u

Personally I'd be very reluctant to buy an annuity when there are so many shares available with well covered circa 6 to 8% divis.  

QrizB

Steve182 said:

Personally I'd be very reluctant to buy an annuity when there are so many shares available with well covered circa 6 to 8% divis.  

Dividends are only well-covered until they're not, and "the rest of your life" is (hopefully) a long time.

Sorry, I'm beginning to sound like @Hoenir !

RogerPensionGuy

Steve182 said:

RogerPensionGuy said:

Grumpy_chap said:

Steve182 said:

If the limit is increased again to >£268K by next government, great, my new pension contributions after the withdrawal will qualify for 25% TFLS.

Possibly.

A future increase in the absolute value of the TFLS may be only available to those with remaining TFLS percentage available.

I am not sure if that is clear, so I will try to expand.

Current TFLS £268k.  An individual draws £134k which is 50% so potentially has another 50% £134k available to draw in the future.
Future TFLS £500k.  An individual who already took £134k (50% of current TFLS) may be restricted to 50% of future TFLS, so only another £250k available.  NOT the £500k - £134k = £366k.

Individual who already took the full 100% £268k may not get anything from an increase in TFLS if the percentage is capped.

Could be done like that.
Could be done some other way.
No-one can be certain - it is all speculation.

Good points here. 

I was keeping 30% of my 268K allowance in reserve and hoping it grow tax efficiently for all the good housekeeping reasons, but now decided to pull the plug and I will of used 100% of the LSDBA any day now.

Doing the above has probably inspired me to get an annuity or two, plus the annuity rates feel nice. 

My research appears to say if a person took 100% TFLS when it was 1M/250K under the LTA and now they have sufficient uncrystallised funds, they can indeed take 25% of that 73.1K. 

It's all very confusing unfortunately. 

The link below is a nice read before bed tonight. 

***

Lifetime allowance (for historic reference) https://share.google/rXrcB8UGA3v7utq5u

Personally I'd be very reluctant to buy an annuity when there are so many shares available with well covered circa 6 to 8% divis.  

I have done a bit of research in to high dividend investing and taking income during retirement and I'm not too comfortable with it, so I'm not picking this vehicle.

I had also looked deeply at just using global income units in drawdown as I liked they way it took emotions out of selling units and just kicks out dividends periodically, still a bit interested in this, I may keep a modest % of pot in such a SIPP with these units generating a bit of cash and decide as I go what I do with the cash, very simple in a SIPP compared to my GIA.

But I'm 95% currently feeling to buy an annuity or two now and possibly a PLA in spounces name to more balance income/tax. 

The link below is a nice read on high income divvideds and the goods the bads. 

***
Is Your Dividend Income at Risk? Here’s How to Spot Dividend Traps https://share.google/hFmH30f9VE1LZDThe
***

Steve182

QrizB said:

Steve182 said:

Personally I'd be very reluctant to buy an annuity when there are so many shares available with well covered circa 6 to 8% divis.  

Dividends are only well-covered until they're not, and "the rest of your life" is (hopefully) a long time.

Sorry, I'm beginning to sound like @Hoenir !

I'm invested in a mix of divi and growth shares. I usually spread my risk over 10 shares in each category. I look only for divi streaks of >5 years and divi covers of >2. My best performing value share, GSL @ ~ 6% yield has a divi cover of >4 and a streak of >10 years. Others, such as Volkswagen, also with ~ 6% yield has a divi cover of ~2.6 and a streak of >10 years. It's just a matter of spreading risk IMO. 

GunJack

Some people have just got too much money.....