Lifetime Allowance for Pensions what is it ?

[kingrollo]

I used to work for a local authority in quite a senior role - when I left I left my final salary pension there - and this becomes payable soon.

However they are now asking for lifetime allowances of any pensions I receive. I don't receive any other pensions yet - but I am currently in the NHS pension scheme and will probably take this and fully retire in the next couple of years ...... Do I need to declare this ?

Anybody been through this - any advice \ experience

Disclaimer:- Please dont reply saying ask the scheme - or a financial advisor - - I will be doing this in due course - but the scheme administrators aren't great to be honest

 

[midlife]

The lifetime allowance (LTA) has just been abandoned by the government in the last budget.

https://futurefocus.staff.hsbc.co.u...=From 6 April 2023, the,to the LTA Tax Charge.

Possibly an out of date question?

 

[kingrollo]

The lifetime allowance (LTA) has just been abandoned by the government in the last budget.

https://futurefocus.staff.hsbc.co.uk/active-hybrid/information-centre/announcements/budget-2023#:~:text=From 6 April 2023, the,to the LTA Tax Charge.

Possibly an out of date question?

Thank you. So wonder my council pension are asking about this - (Told you they weren't the best )

 

[Slick]

From the provided link.

The Chancellor also announced his intention to completely abolish the LTA framework during the 2024/25 tax year. Please note that it is unclear if the proposed abolition of the LTA from 6 April 2024 will proceed, and if it did, how this would be done. Given this, you might want to pause any plans that relate to this until more is known.

 

[Bonefish Blues]

The lifetime allowance (LTA) has just been abandoned by the government in the last budget.

https://futurefocus.staff.hsbc.co.uk/active-hybrid/information-centre/announcements/budget-2023#:~:text=From 6 April 2023, the,to the LTA Tax Charge.

Possibly an out of date question?

Not yet gone though - it's from a future tax year.

LTA's still live and it's currently a valid Q re disclosure as far as I can see.

 

[sheddy]

Was this for millionaires ?

 

[figbat]

Here are the current and previous LTA amounts: https://www.gov.uk/government/publi...owances-pension-schemes/pension-schemes-rates

 

[ClichéGuevara]

As I understand it, on your pension statement, it should give your lifetime allowance percentage. If it doesn't, it's what fraction of £1,073,100 your local authority pension payment would be.

Here's how to calculate it.

https://www.moneyhelper.org.uk/en/p...hemes, you,your current annual drawdown limit.

 

[kingrollo]

Was this for millionaires ?

Yes - in a way if you total pension over 20 years is over £1m - then you have exceeded the LTA - its doesn't mean you can draw down £1m though !

It seems the change is that the rate of taxation is whats changed - it used to be 55% - but now its 25%.

Im nowhere near the limit - but don't want my pension delayed whilst its being investigated.

 

[MichaelO]

Yes - in a way if you total pension over 20 years is over £1m - then you have exceeded the LTA - its doesn't mean you can draw down £1m though !

It seems the change is that the rate of taxation is whats changed - it used to be 55% - but now its 25%.

Im nowhere near the limit - but don't want my pension delayed whilst its being investigated.

There's many people who get near/over the limit with final salary pensions. You "only" need to have a final salary pension paying around £45-£50k a year to exceed the lifetime allowance. And the 25% tax is in addition to any income tax due on the pension (and it's still 55% if you take it as a lump sum, I think).

Horribly complex.

 

[figbat]

There's many people who get near/over the limit with final salary pensions. You "only" need to have a final salary pension paying around £45-£50k a year to exceed the lifetime allowance. And the 25% tax is in addition to any income tax due on the pension (and it's still 55% if you take it as a lump sum, I think).

Horribly complex.

As far as I know the LTA calculation for a DB pension is 20x your pension payout, so you need (at the current LTA level) a pension of £53,650 to hit the LTA. Obviously this depends on personal factors yada yada.

 

[MichaelO]

As far as I know the LTA calculation for a DB pension is 20x your pension payout, so you need (at the current LTA level) a pension of £53,650 to hit the LTA. Obviously this depends on personal factors yada yada.

£53k assumes no lump sum taken. Any lump sum would need to be added to the 20x value.

 

[kingrollo]

As far as I know the LTA calculation for a DB pension is 20x your pension payout, so you need (at the current LTA level) a pension of £53,650 to hit the LTA. Obviously this depends on personal factors yada yada.

20x annual pension + lump sum.

 

[Beebo]

I know it’s a first world problem, but a few lucky earners (an increasing few) are paying extra into pensions to avoid the dreaded 60% tax trap at £100k.
But they will get caught either way.
Financial planning is tricky at that point.

 

[Jameshow]

Wasit not £1.5m and many drs esp with generous pensions where retiring early because the pension taxes were making it not economic to keep working.
However the rules gave been changed I believe. Which is so fortunate for me!!! 😉😉😉