What about my other benefits, the charges & your options
What about other pension benefits you may hold?
- If you hold private pensions (not in payment), these need to be added to your total pot. You do not need to factor these up, as it is just the face value that will be applied when calculating the total.
- If you hold other defined benefit or defined contributions pensions (not in payment) from previous employments or savings, current values will need to be sought before an accurate LTA valuation can be calculated.
- If you have any pensions already in payment these must be taken into account and are calculated differently.
What are the tax implications?
As noted previously there is currently no charge to the total value of all your pensions from the Lifetime Allowance (LTA).
You are restricted for the amount of tax free cash to 25% of the previous LTA.
This does not mean you cannot take more cash from your pension however, it does mean that the excess (over 25% of the LTA) will be taxed. The rate of tax will depend on how you take these extra benefits:
- If you take excess benefits as a pension, there will be no LTA charge; however, the pension would then be liable to income tax
- If you take excess benefits as a lump sum the tax charge is 55% with no further liability
Are there any other options?
It was possible to preserve the previous higher LTA limits in 2012, 2014 these are now closed to new applications.
In 2016 Fixed and Individual Protection was announced, both are still available, with no time limit on a back-dated application and these may still be a legitimate planning tool for you.
To understand how and when this applies, please see the Pension Protections Section. If you are close, or think you may be close, to these figures we recommend you contact us for more information.