29th March 2018

Prudential: Can your client wait to vest?

Clients who have lifetime allowance issues may be better off waiting until after 6 April to vest their benefits. However, the important thing to factor in is where the pension fund will be at the point of crystallising. Senior Technical Manager at Prudential, Clare Moffat investigates.

The issue

It was confirmed at the Autumn Budget that the Lifetime Allowance (LTA) for pensions savings will rise in line with CPI as at the preceding September. This means that the LTA for 2018/19 will be £1,030,000.

For clients who are over or near to the LTA then when they crystallise may have tax implications. The increase in the LTA means that if the LTA excess is taken as a lump sum then there will be a saving in tax of £16,500 and if the excess is taken as income then there is a saving in tax of £7,500.

Bear in mind that if a client uses up 100% of the LTA before 6 April 2018, then they don’t have an extra 3% after 6 April 2018. 100% is 100%.

Read full article here.

Tax, Trust & ISA, Pensions