GE Life has raised concerns that some pension policy holders could exceed their Lifetime Allowance limit (LTA) and be subject to a higher tax charge after new rules are introduced on ‘A' Day.
The company claims those policy holders who appear to be ‘safe’ might actually be most ‘at risk’ as they may have to face a Lifetime Allowance charge at retirement, if their fund exceeds the LTA. It argues a person aged 45 with a fund of just £500,000 could find the new rules after pension simplification is introduced in April 2006 mean they may be in danger of exceeding the LTA and as a result HM Revenue and Customs will levy a tax charge of 25% if the exceeding benefit is taken as income and 55% if it is taken as a lump-sum. This situation is compounded, says the provider, for those who...
To continue reading this article...
Join Professional Adviser for free
Signup and gain exclusive members-only insights
- Unlimited access to real-time news, industry insights and market intelligence
- Stay ahead of the curve with spotlights on emerging trends and technologies
- Receive breaking news stories straight to your inbox in the daily newsletters
- Make smart business decisions with the latest developments in regulation, investing retirement and protection
- Members-only access to the editor’s weekly Friday commentary
- Be the first to hear about our events and awards programmes
