r21442 wrote:I stopped working 5 years ago, locked in an LTA of £1.25m.
I'm 59 now with a DB projected at £12.5kpa at 60 and £850k in DC pots and an LTA of £1.25m FP2016.
So your LTA amount is (12.5*20) + 850 = 1,100. You're going to have manage your pension actively. Probably crystallise now, or soon, to use up the bulk of your LTA, then go into drawdown to hold the LTA charge down. But don't change your investment strategy on the DC pot - taxed profits are better than no profits.
r21442 wrote:
She's 55 now with DC pots of £958k and just the current LTA of £1.073m.
No chance that she won't exceed the allowance. But on her income level it's close to irrelevant.
r21442 wrote:Between us we have £842k in ISAs, full £100k in PBs, £70k in cash, mort free house worth £1.6m and two kids both 1st year uni.
If you fund them through uni that's not a gift for IHT purposes [ education - fees, living expenses, the lot ] and will spare them graduate tax for years.
r21442 wrote:Our only tentative plan is to sell the house (way too big for 2) and have two smaller properties, one in the Canaries and put that in the kids names as some sort of IHT avoidance assuming we both live a few years.
I see reservation of benefit has already been mentioned. That's noise in this situation. Have a google for POAT ( Pre-owned Assets ). You'll get hammered.
r21442 wrote:
Q1 - Daft as it sounds what do we have to do to crystallise - I mean the process - do I contact the taxman or just the pension companies?
Pension companies.
r21442 wrote:Q2 - How is my DB pension valued towards my LTA - on 20x the per annum at the date of crystallisation or the transfer value (£422k)?
20 * payment or any lump sum take plus ( 20 * remaining payment )
r21442 wrote:Q3 - Either way, it's looking like we are both close to LTA and the info that growth will be judged again at 75 is crap to say the least. My initial plan had been to leave all capital and live off a drawdown rate of 3.5% which should allow for decent growth assuming I can continue to manage my funds and pick winners long-term and also stay in base rate tax. Also we'd have invested the ISAs in high yielding investments (6-7%) until the state pensions kicked in and assume no or -ve growth. Now it seems like taking a larger pension drawdown might be better in light of LTA @ 75 judgement issues? I had no idea on whether to take the 25% TFA but now it seems that could be a good idea? Anyone any pointers?
BTW, we'll consult an IFA too for this stuff but I am very very wary. Also, I'm being flippant about paying the taxman! Don't mind paying my share though its a kick in the nuts when I could have been driving a Porsche all these years instead!
One plan is to do flexible drawdown on the pensions to control the LTA hit, and then at 75 switch to drawing down the ISA and leave the pension funds as ( currently ) IHT exempt pots to pass down to your children.
Do not talk to to an IFA, you do not need that sort of advice. Find a Financial Planner with the full gamut of qualifications ( i.e including pensions ) if you want advice in that direction. Otherwise talk to a tax advisor.
I hadn't seen ursaminotaur's post. Too much to re-edit for that, so happy reading.