Money Out

Question 1

In what situations can an individual take benefits before the NMPA?

Answer 1

Contractual right to take benefits before age 50 in place before 10/12/03
Special occupations who were scheme members before A-day

Question 2

How much is the LTA reduced by for those in special occupations taking benefits before NMPA?

Answer 2

2.5% for each full year before NMPA

Question 3

If funds have been previously designated to FAD, what BCE applies at age 75?

Answer 3

The growth on the drawdown funds since original crystallisation

Question 4

How long does the scheme administrator have to send a BCE certificate to the member?

Answer 4

31 days from the trigger event

Question 5

How long does the member have to send their BCE certificate to all other active DC schemes?

Answer 5

91 days from receipt

Question 6

How are DB schemes measured against the LTA?

Answer 6

Scheme benefit multiplied by 20 plus any additional, non-commuted PCLS

Question 7

What rates are charged when the LTA is exceeded?

Answer 7

25% of excess if taken as income
55% of excess if taken as lump sum

Question 8

What are the features of enhanced LTA protection? (amount, continuing accrual, max PCLS)

Answer 8

No limit on amount in pension.
No continuing accrual allowed.
Max PCLS is based on % available before A-day, if PCLS>£375k.

Question 9

What are the features of primary protection? (amount, continuing accrual, max PCLS)

Answer 9

Amount limit based on PP factor which is applied to current LTA.
Continuing accrual is allowed.
Based on £PCLS available at A-day, increasing with relative maximum increase in LTA since A-day (assuming pre A-day PCLS > £375k).

Question 10

What are the features of fixed protection? (amount, continuing accrual, max PCLS)

Answer 10

2012 amount: £1.8m
2014 amount: £1.5m
2016 amount: £1.25m
No continuing accrual allowed.
Max PCLS is 25% of protected amount applied for (2012, 2014, 2016).

Question 11

What are the features of individual protection? (amount, continuing accrual, max PCLS)

Answer 11

2014 amount: FV @ 5/4/14 (£1.25m-£1.5m)
2016 amount: FV @ 5/4/16 (£1m-£1.25m)
Continuing accrual is allowed.
Max PCLS is 25% of LTA

Question 12

If a member has enhanced/fixed LTA protection, how long do they have to opt-out of any auto-enrolment?

Answer 12

1 month

Question 13

What is the criteria for an individual looking to take a trivial commutation lump sum?

Answer 13

£30k max value of total RPS rights.
All payments made within 12 months.
Some LTA must be available (but this doesn’t trigger a BCE).
No other trivial commutations paid before.

Question 14

What is the criteria for an individual looking to take a small pots lump sum?

Answer 14

£10k max value of small pot.
Maximum three small pots payments can be made from non-occupational schemes.
Payment must extinguish all rights within that scheme.

Question 15

In what situation can a member claim a serious ill-health lump sum?

Answer 15

Where they have a life expectancy of less than 12 months

Question 16

What does a member need to be aware of when transferring a pension to a QROPS with regards to LTA?

Answer 16

Transfer is treated as BCE, with any excess over LTA taxed at 25%.

Question 17

How can a a transfer to a QROPS avoid an overseas transfer charge?

Answer 17

Member lives in same territory as QROPS.
Member lives in EEA and QROPS established in EEA.
Scheme is an OPS and member is an employee of sponsoring employer.

Question 18

If a member returns to live in the UK, what conditions would they have to meet to avoid income tax on QROPS withdrawals?

Answer 18

Relevant withdrawals don’t exceed £100k.
If transferring before 6/4/17: reside outside UK for at least 5 years.
If transferring after 6/4/17: reside outside UK for at least 10 years.