It’s instinctive that clients want to avoid tax charges, and it’s no different when it comes to the lifetime allowance, but kneejerk reactions could result in more negative outcomes for the client. In this article Neil MacGillivray explains how advisers can help manage this, and why in some scenarios it’s better to get at least 45% of something than 100% of nothing…
I was chatting recently with a friend who's a member of a defined benefit (DB) pension scheme, when she announced that she was likely to have to pay a lifetime allowance (LTA) charge due to a recent promotion. To avoid it, she's considering either ceasing active membership or taking early retirement. Under the latter option, there's an actuarial reduction, and her thinking was that when applied, it would significantly reduce any charge. In her eyes, the matter was further exacerbated by the freezing of the standard LTA (SLA) till the end of 2025/26 tax year. Generally, I find some peo...
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