FOR ADVISERS ONLY
Benefit options and lifetime allowance
The basics
This analysis focuses on when benefits can be taken, summarises the main options available and also looks at the restrictions that apply.
Reaching age 75: our top five frequently asked questions
We look at reaching age 75 in the latest in our series of top five FAQs on pensions technical topics.
Income drawdown
One of the most popular options is income drawdown. There are two types: capped and flexi-access drawdown.
Flexi-access drawdown
Since 6 April 2015 any new drawdown plans must be a flexi-access drawdown plan.
Capped drawdown
New capped drawdown plans were only available until 6 April 2015. Existing plans can continue as long as the GAD limit is not exceeded.
Lump sums
Sometimes it's possible to exchange all pension benefits for a one-off lump sum.
Emergency rate tax
An explanation of when emergency rate tax applies and how to get it back.
Lifetime allowance
There is a maximum amount that can be taken from a pension scheme without being subject to a tax charge. This is called the lifetime allowance and fittingly the tax charge is called the lifetime allowance charge.
It is currently possible to protect benefits from a lifetime allowance charge as a result of the lifetime allowance being reduced. This protection has the effect of locking the lifetime allowance at a certain rate, meaning the reduction won't apply. However, there are conditions which, if broken, will result in protection being lost.
Recycling
Once benefits have been taken, it is possible to re-use this money and pay it back into a pension. However, you won't be surprised to hear that there are rules and restrictions in place.
Watch our webinar*
Join Ryan Medlock as he looks at the risk factors associated with income drawdown, the regulator’s concerns and tips on how to review your clients.
Income drawdown – the good, the bad and the ugly presentation
*This webinar was recorded on 21 March.
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