R04 Flashcards
What are the dates to know
State pension age 66
Personal or workplace pension age 55
A day when lifetime allowance can into effect 2006
DB payment escalation changed from rpi to CPI 2011
Flexibility rules for pensions 2015
State pension moved from old to new scheme 6 April 2016
What is threshold income
Includes everything spare from pensions contributions and income from tax free investment ISAs
What are the tax rules when an annuity contract is in payment
25% is tax free 75% is taxed at your marginal rate
What are the benefits of paying into a pension
Tax relief when paid in
Grows tax free
Outside your estate for iht purposes
Can take 25% tax free, rest is charged at marginal rate
Death benefits - under 75 whole amount tax free up to the LTS
Auto enrollment benefits you pay 5%, employer pays 3%
What is the life time allowance
Amount can crystalise and get 25% tax free
1073100
25% of this can get tax free
Anything above charged at marginal rate
Downsides of paying into a pension
Money tied up till 55
Clients thing can do better than a pension
Complex
Paying into a pension
Anyone can pay into a pension from birth up until 75, technically can after but no tax relief
In order to contribute to a pension you need to have relevant income (pensionable income) this includes all salary, bonus, commission, self employed income, furnished holiday let income, patent rights income. IT DOES NOT INCLUDE RENTAL, DIVIDEND OR SAVINGS
Paying into a pension
Anyone can pay into a pension from birth up until 75, technically can after but no tax relief
In order to contribute to a pension you need to have relevant income (pensionable income) this includes all salary, bonus, commission, self employed income, furnished holiday let income, patent rights income. IT DOES NOT INCLUDE RENTAL, DIVIDEND OR SAVINGS
How much can you pay into a pension
Maximum contributions is 60,000 or 100% of relevant income with tax relief at your highest marginal rate
If are a non tax payer still get 20% tax relief
If have no relevant earning (pensionable income) max gross put in is 3600 or 2880 net as nets grossed up from 20% tax relief
Types of pensions schemes
- Personal pension plans or contract based scheme
Tax relief is by the relief at source method - I will contribute into this pension from my net pay - 20% automatically gets added to my contribution and this gives me my tax relief. If HRTP or ARTP must full out self assessment you get further tax relief. This gets paid to me not the pension.
Cannot get contributions out unless cancel within the first month or past age 55. If past first month will stay in arrangement or can transfer to another pension
Types of pension schemes
2. Occupation scheme also known as a trust based arrangement
Tax relief - net pay arrangement (salary stays the same), deduct pension contributions from gross pay. All tax relief is given on day 1
If you leave the scheme within the first 3 months you are auto refunded contributions. If leave between 3 months and 2 years you are offered a refund on contributions. Special tax rates on refunds. It’s 20% on first 20k and 50% on anything above that. It is irrelevant of what tax payer you are. It is only your own contributions that are refunded not employer.
Salary sacrifice
Different to net pay arrangement
It is a written agreement with employer to reduce salary in arrangement to pay that money into my pension plan as an employer pension contribution. Now salary is less, pay less NI and so will employer. Employer does not have to contribute these savings to my pension it is what is agreed. Note it does reduce salary for borrowing purposes. No limit on how much can salary sacrifice as long as does not bring below living wage.
Relief at claim on a retirement annuity contact
Old - all contributions paid gross and had to apply to hmrc for all tax relief.
Rules for employer tax relief
Mist use wholly and exclusive test e.g. much work for employer to receive employer contributions
Recycling of tax free cash
Over a 12 month period must break all 4 rules
- Is the PCLS greater than £7500
- Have my contributions increased by more than 30% this year compared with last year
- Are you recycling more than 30% of the PCLS which was withdrew
- Was it premeditated
Charges for recycling pension tax free cash - unauthorized payment charge!
Individual
1. Unauthorized payment charge of 40% on the original PCLS withdrawn, not the amount recycled
2. Subject to unauthorized payment surcharge this is applicable if the original PCLS is more than 25% of the pension fund - extra 15% surcharge
Scheme
3. Scheme who received the payments they get 15% section charge
4. If continue to do it they will be shut down as a pension scheme and subject to a 40% deregistration charge on the entire fund
The annual allowance rules
The most you can pay into a pension and get tax relief. It includes all personal, employer contributions and the tax relief
AA this year 60k
Previous years 40k
Can carry forward for previous 3 tax years
If you go over AA you pay a tax charge at your highest marginal rate
If your annual allowance tax liability is over 2k you can ask the scheme to pay it out of your fund. Not guaranteed though. If Dc take from pot, of DB reduce benefits by tax charge
Tax planning when considering the annual allowance
If I have paid 60k into my pension and used all my AA, then my employer contributes another 20k, I will be left with a tax change on this amount.
Employer does not get the charge always the individual
Tapered annual allowance
If threshold income (total all income then minus all pension and tax free income) if this is under 200k there are no changes to the annual allowance
If threshold income is over 200k then you need to check their adjusted income (all taxable income, all employer and pension contributions) if adjusted income is over 260k your annual allowance reduces by £1 for every £2. Calculation is done on an annual basis as salary changes.
The maximum reduction to annual allowance is 50k (360k earning ls and over) so will always have 10k annual allowance
Money purchase annual allowance
What is it
It is where you are limited to contributing £10,000 into a DC/money purchase pension arrangement
What triggers the MPAA
If you take any funds from a DC scheme using UFPLS (uncrystalised fund pension lump sum) - each payment 25% tax free 75% taxed marginal rate
If in a capped drawdown and take more than 150% of GAD rate
If take income from flexi access drawdown - if take money from 75% pot it triggers it
If take income from a flexible annuity
If take income from a fixed term annuity
What does not trigger MPAA
A scheme pension does not trigger it
A guaranteed lifetime annuity does not trigger it
If only take tax free cash from flexible drawdown does not trigger it
Admin for triggering MPAA
If trigger MPAA from that date onwards to can co tribute 10k for the remaining tax year from trigger date and every subsequent tax years until a DC scheme
If go over 10k tax charge on excess at your marginal rate
The responsibility is on individual to notify their other pension schemes once they have triggered MPAA, this should be done within 91 days to monitor not going over limit
Alternative annual allowance
You can no longer carry forward e.g. if only pay 5k this year cannot carry forward 15k next year - use it or lose it
DB contributions can still be made up to the annual allowance with carry forward and carry forward is only into DB scheme
Example
If put 10k in DC can still put 50k ina DB scheme
Example of carry forward
If put 8k in a DC scheme and 45k in a DB scheme total is 53k so can carry forward 7k into a DB scheme
Pension input amounts
DC is total of sum you paid in, employer and tax man
DB scheme is complicated just remember factor of 16 then times that number by CPI
Carry forward of allowances
ability to carry forward unused relief from previous 3 tax years
For this exam 2023/24 the relevant years will be
2020/21 40k
2021/22 40k
2022/23 40k
It is only unused amount
How it works in practice - use current allowance then go back to 2020/21 and use that unused allowance
You need to have a pension running in the year you are carrying forward in order to carry forward, don’t need to pay in just have one
Exam tip for carry forward - if employer limited by salary, if director of limited company not capped by salary as can draw more money to use unused AA carry forward
Lifetime allowance
Introduce first in April 2006 at 1.5 million
The lifetime allowance is now £1,073,100 and the maximum PCLS is 25% of this so £268,275. This is the maximum tax free unless you have any other protection in place
Once you go above you PCLS you pay tax at your marginal rate
Transferring your pension overseas
Transfer charge of 25% of total fund value.
If transfer into Europe classed as one country so no transfer charge
Protection available to LTA available at A day
Type 1 - primary protection
Primary protection
Needed to have pension fund more than 1.5m. with the protection you were allowed to continue contributing
How it is worked out
At A day what was your entitlement to PCLS, all you do is at 20% to this number
E.g. at A day fund with 3 million, your PCLS at the time is 25% of this so 750k, add 20% to this so 900k and this is now your PCLS.
The only time can lose your primary protection is if have to give up some of your pension in a divorce settlement
Enhanced protection
If you had enhanced protection you had to stop paying into your DB or DC, this scheme could still grow
With enhanced protection you kept the same PCLS you had at A day and this is the same you have now.
Negative if fund value decreased so does your PCLS
You can now start to pay back into this scheme but fund was valued at 05/04/23 for PCLS purposes
Fixed protection
Fixed protection is there to protection you as they reduced the LTA over time. For fixed protection you had to stop paying in and this meant could no longer get employer contributions
Fixed protection 2012 your LTA is 1.8 million
Fixed protection 2014 your LTA is 1.5 million
Fixed protection 2016 your LTA is 1.25 million
Individual protecti
Specific to you and what LTA you get in a specific year, you get 25% of that
Accessing your pension - small pots
Applies to both DC and DB schemes
Not tested against LTA
Does not trigger MPAA
Can take up to 3 lots of 10,000 from personal pensions. If occupational pensions can do unlimited amounts
25% of the amount taken is tax free - the rest is taxed as earned income - this is paid net of BRT, if HRTP or ARTP have to declare via self assessment
No restrictions of time frame that you take small pots over
Always first thing do when take pension
Ways to take pension - trivial commutation
Only applies to DB schemes
All needs to be done within 12 months
Limit is 30k and this is the max, it is not per annum
25% is tax free the rest at EMERGENCY TAX LEVEL
it is the total of all your DB funds they all must total below 30k
If the scheme is already in payment any commutation amount would be taxable
Note if I die, spouse can take 30k per scheme
Triviality valuation of benefits
Scheme pension income pre A day - you value the annual scheme pension by x 25
Benefits crystalized payment after A day, value as if they would be for LTA purposes
Accessing your DC pension before age 55
Ill health - unable to work, must be signed off by medical and employer. Can access before 55 and normal rules are in effect - negative miss out on years of contributions and growth of fund
Serious ill health - less than 12 months to live - if under 75 access pension tax free - the pension fund needs to be uncrystalised
It is all tax free up to the LTA then after this at marginal rate, either have to take all pension or none of it.
Consider though if take it all, it will now be part of estate for iht purposes…
Death benefits for a DC pension
If she below 75 whatever the fund is in e.g. crystalised, uncrystalised, drawdown - the death benefits are paid out completely tax free up to the LTA, anything above this is at the recipients marginal rate. Must be paid out within 2 years or all taxed at marginal rate
Roles in a DC scheme
Nominee - who.i nominate to.reciece the fund in my death
Successor - who the nominee nominates to take the fund after then, can go through the generations
If person dies over 75 and passes to someone under 75 then they die. If they do not draw it out there is no tax and passed on tax free
If pension moved into a trust 45% tax unless bare trust for someone under 18
Rules for a DB or occupational scheme on death
Down to scheme rules and spouse or dependant only can receive ongoing pension. It is subject to tax regardless of the age of death
Protected retirement age
In some circumstances you can have a protected retirement age which lets you retire before 55. E.g. sports person or dancer
If do your LTA is reduced by 2.5% for each year you take it before age 55
If in armed forced doesn’t effect you LTA for retiring early
Choices in retirement
1. Secured - scheme pension
Scheme pension - must be paid least annually, it must be paid for the rest of your life and a max guarantee period of 10 years. I.e if die after 2 years continue to pay to estate for 8.
Your scheme pension is secured income for life but can decrease in 2 circumstances - divorce or health improves.
If scheme offers scheme pension, they must offer the opportunity for you to shop around first to see what’s on the market
Choices in retirement
Annuity
Buying an annuity, once buy one you are locked in.
Things to consider when buying an annuity
If put all pension in annuity means no lump sum and that is that
Minimum guarantee period, spouse cover, inflation linked, protected annuity lump sum in event of death
All will reduce annuity pay out
If annuity is paid to a care home it is paid gross
Can pick an annuity without need for professional advice
Annuity gain - buy early more people to hedge bets, annuity drag buy later in life less people buying annuity at your age so less
Retirement options
Capped drawdown
Can no longer take a capped drawdown out legacy 6 April 2015
capped drawdown is drawdown but your income is capped between 0% and 150% of GAD rates, if you go above this you lose your drawdown ability and go into flexi access. GAD rates are reviews every 3 years and once buy 75 reviewed annually
Taking income from capped drawdown does not trigger MPAA
If you die capped drawdown dies with you and is not passed on
Reference date is when the pension was taken out
Nominated date is within 60 days of reference date - have 60 days for actuaries to bulk do calculations on schemes
Retirement options
Flexi access drawdown
Get all tax free cash before start taking income
Say pension pot of 400k take 100k tax free as PCLS.
Other 300k to manage into retirement in drawdown, as long as don’t touch 300k taking the 100k does not trigger MPAA
Retirement options
UFPLS uncrystalised fund pension lump sum
Do not get tax free sum in one go
Say 400k.pot and withdraw 100k
25k is tax free 75k pay tax at marginal rate
Can be useful for iht planning as each pot you take is crystalised but rest isn’t so outside of estate
Also if withdraw less than 12570 each year pay no tax all 75% falls into PA…
Downsides of flexi access and ufpls
Running out of money. Not guaranteed income so can use it all up then have nothing left
Defined benefit schemes
Guaranteed by employer and index linked
Technical provision is the valuation of the schemes liabilities
Scheme are trying to reduce their liabilities by increasing contributions for members and employees, reduce future accrual rates e.g. moving from 1/60th to 1/120th, or watching to career average earnings scheme as opposed to final salary. And can close scheme
It is the scheme rules and the trustees who determines the rules of the final salary
Note- teachers pension scheme based on best average 3 years out of last 10
Defined benefit valuations
Revaluation - increase in amount of fund from when you leave scheme and stop paying into it to when pick it up a retirement age
Escalation - how much the amount I receive increases once I take my DB pension
The government sets minimums that they must increase by, in order to save monies the scheme and trustee could cut rates to the minimum
Public sector usually increase by CPI and private is decided annually.
Increasing your benefits under a DB scheme
This is for when want the number of years the DB scheme pays for to increase.
Example - scheme retirement age is 65 and will pay for 20 years, if want 25 years then you have to pay an extra X% until retirement
AVC - additional voluntary contribution - it is a DC scheme but directly linked to the DB scheme - you pay into avc and this provides tax free cash, means don’t have to go into pension pot via commutation
DB hybrid schemes
DC scheme with low DB accrual rate scheme
At retirement you take the bigger pot
Pension calculations for DB schemes
The accrual rate is based on the basic salary, it does not include things like bonuses
DB scheme accrual rate of 1/60
With a 1/60th accrual rate there is no PCLS provided, if the client wants to take a lump sum must to it by the commutation route, giving up some of your annual pension income for a lump sum. E.g. commutation 12:1 you divide the lump sum want by 12 then take this from annual pension income.
The lump sum is tax free
DB scheme accrual rate 1/80
Auto get a PCLS tax free, it is 1/80 of the fund times by 3
Working out max PCLS for DB scheme
20 x (pre commutation pension x the commutation factor) / (20+(3 x commutation factor))
DB pension escalation rates
The rate in which DB scheme pensions in payment increase each year for individuals reaching spa after 6 April 2016
Before 1988 - no requirement
1988 to 1997 - no requirement for non GMP and CPI up to 3% for GMP schemes
1997 to 2005 - both non GMP and GMP CPI up to 5%
2005 onwards - both non GMP and GMp CPI up to 2.5%
DB pension Revaluation rates
Revaluation is the date you left and stop contributing, the date left is the date used for revaluation in deferment (GMP) i.e how much goes up each year
Date leaving service - fixed rate
Before 1988 - 8.5%
1988 - 1993 - 7.5%
1993 - 1997 - 7%
1997 - 2002 - 6.25%
2002 - 2007 - 4.5%
2007 - 2012 - 4%
2012 - 2017 - 4.75%
2017 - 2022 - 3.5%
2022 onwards - 3.25%
For non GMP
1991 - 2009 5% or CPI if less
Post 2008 - 2.5% or CPI if less
Annuity calculation where some requires yearly income and wants to know how much to crystalised
- Work out home much per £100
- 25 tax free so put this to side
- 75% times annuity rate less tax
- Add 25 to adjusted level, turn this into a %
- Divide the required income by the net % per 100
How to work out total net income under phased retirement using annuity of a pot of money from pension
- 25% crystalised funds tax free
- 75% of fund times by the annuity rate
- Less tax
- Add the 25% tax free sum to the adjusted 75% annuity after tax
Freestanding AVC and personal pension plan are same thing
What happens if take more than 25% PCLS?
55% unauthorized charge
DB schemes and retiring early
If want to retire early it is possible but it is determined by the scheme rules and the trustee. It can vary and in exam it will give you the reduction rate, you take this from the annual salary. This is because if retire early scheme has to pay out for longer
DB scheme bridging pension - takes place normally in redundancy, matches rate would receive at retirement.
DB scheme and Ill health
All down to scheme rules, could give current amount built up or boost you to what would have
For serious ill health tax free payment
DB schemes and funding issues - fund valuations
To check the health of a scheme fund valuations are complete
Ongoing scheme valuations- all scheme have to provide valuation every year and a full actuary valuation every 3 years
Insolvency valuation - if scheme unable to fund 90% of scheme it will go into pension protection fund
Pension transfers - this is transferring out of a DB scheme
If more than 30k need to get specialist sign off
Needs to be uncrystalised
Fca see transferring out of a DB thing not the right thing
Once a year must receive statement of entitlement
Got to transfer all benefits in one go
Transfer values on DB schemes
Can go up or down based on annuity, lower investment returns, inflation…
Contingent charging for DB schemes
Old structure of transfer and promoted pushing transfers through where not right thing, get all money if transfer goes through
Can no only do it on two occasions, serious ill health or financial hardship
Bridging advice method for DB transfers
Charge for research, then come back with decision to transfer or not to transfer, then final payment if go ahead
Reasons to transfer out a DB scheme
Death benefits - a DB scheme can only go to a dependant
A cautious investor would not move out a DB scheme
Timeline for transfers of a DB scheme
Notice given by individual in form of a letter
Within a month the scheme need to say if take financial advice i.e over 30k
Within 3 months of letter from client need to provide statement of benefits and amount willing to transfer to personal pension
3 months once received for client to say if want to go ahead with transfer
3 months from when client wants to go ahead to compete
Note what max benefit can get from DB scheme
Used to be 40 years now not capped
Purpose of nest
Allow all employers to offer pensions
Stakeholder pensions
Initially was a low cost solution that failed, it failed as employers were not obligated to pay in
Demographics of pensions
People living longer, DB pensions closing down as have to fund for longer
Government incentives to seek advice
Advice guarantee is where employer allowed to deduct £500 as a business expense to pay for financial advice for employees and is not a benefit in kind
Pension wise - free guidance advice
Pension advice allowance - if got no money take 3 x £500 out of DC pension pot to pay for advice
Role of the government
Provider of the state pension
Provide pension credit - means tested it is less then the state pension for those in need.
Be the regulator - fca, ombudsman…
Key roles in financial planning
Scheme member - individual
Trustee - in charge of scheme, makes decisions. Note in DB scheme continue to manage into retirement, in a DC scheme once crystalised it’s the individuals responsibility l
DB scheme vs DC scheme - transfers
DB scheme can only transfer to dependant (spouse or child under 23)
DC can go to anyone
Regulation - the pensions regulator
Regulate all work based pension schemes, complete investigations, act to put things right . Help schemes look out for scams, now some responsibility is on the scheme
Regulation - the financial ombudsman
Complaints and maarketing
Maximum compensation is 415k plus costs plus costs on interest
FOS - process and timeline
Complaint needs to be acknowledged in 5 working days
A holding letter needs to be sent within 4 weeks either to say completed investigation or need 4 more weeks
Then after the extra 4 weeks outcome needs to be delivered, with info supplied that they can complain to FOS
Once letter received for 6 months to take to FOS
Note - can complain 6 years after event or 3 years after becoming aware
The pensions ombudsman
Complain about running of scheme and anyone can complain, members, trustees…
Pension rules in divorce
Earmarking - rubbish, benefits attached to ex, if ex remarries they lose the right to pension, I can control how pension is paid ex can’t do anything, tax at my marginal rate then paid to ex and can’t claim back
Offsetting - I take house you take pension
Sharing order - clean break equal split. Note if unfunded DB scheme only option is to become independent member of that scheme
Transfer club
This is for unfunded DB schemes, the only option is to transfer to another unfunded DB scheme if move, this is referred to as transfer club.
Unfunded DB schemes cannot be taken flexibly
What is the only funded public DB scheme
Local government
Rest of public sector DB schemes as unfunded
Pensions and maternity / paternity leave
DB scheme everything stays the same in terms of pension contributions
DC scheme slightly worse off - employer contributions stay same however because it is based of your % earnings and you earning will drop DC is slight worse off
Old state pension nic rules
To get full basic state pension had to have 30 years nic, to get any state pension just had to get 1 year so would get 1/30 state pension
Old state pension rules and self employed
Only entitlement was basic state pension could get anything more
Old state pension rules and employed
The below all built in each other giving more entitlement
S2P 2002-2016
SERP 1978-2002
Graduated pension 1961-75
Basic state pension
Old state pension rules - contracting out
2 ways to contact out
Part of DB scheme and employer pulls out - they have to offer GMP
You contact out by a personal pension - still pay nic but gov pay it to your personal pension
Where says protected rights in personal pension just means money has come from nic
Category b pension
State pension where built up less than 60% nic can use spouses
New state pension - single tier pension nic rules
To get full state pension need 35 years nic
And minimum to receive any state pension is 10 years so 10/35ths
The triple lock
It is the rate single tier pension goes up by and the basic rate pension
Higher of 2.5%, CPI inflation or national average earnings increase
The rest under old scheme including protected payment only go up by CPI
Foundation amount and protected payment a
When moved to new signal tier pension if under old rules someone had accrued more than new they got to keep their allowance - names foundation amount. The difference between single tier state pension and foundation amount is known as protected payment
State pension and moving abroad
Only get increase in state pension if move to Europe
If move outside Europe still get it though
Integrated state pension
Where employers considers amount get from state pension when calculating benefits
When did contracting out end
2016 for DB scheme
2012 for personal pensions
State pensions age
Currently 66
By 2028 be 67 and at that point want to align 10 year gap with personal pension
State pensions age
Currently 66
By 2028 be 67 and at that point want to align 10 year gap with personal pension
State pension age and nic
Once built 35 year nic still have to contribute till hit spa at that point can stop
Taxation of state pension
Always paid gross but is taxable - takes up part of personal allowance
If have no personal allowance have to declare through self assessment
Differing the state pension
You can defer even if currently in payment but only once
Anyone who reached SPA before 6 April 2016
The minimum deferral period is 5 weeks, if defer 5 weeks get extra 1% on pension when start taking it. If leave it 12 months extra 10.4% if leave 2 years get 20.8%. if left 12 months could get missed payments and extra 2% as cash lump sum. Ifa died in deferral any benefits get paid to estate
Tax deferral keeps you in same tax band when receive payment
Anyone who reaches state pension age after 6 April 2016
Minimum deferral period is 9 weeks, get 1% on pension. If leave it 12 months it’s an extra 5.78%. cannot no longer take cash lump sum. If die no guarantee paid to estate
Bereavement payments
Got to be under state pension age
Claimed by spouse or civil partner
Paid for 18 months - amounts in tax table!
Types of individual DC schemes
PPP (personal pension plan)/ stakeholder / nest - all individual plans
GPP (group pension plan) / group stakeholder - exactly same as PPP apart from do not get to decide the pension provider
SiPP (self invested personal pension) - wider investment choice
Types of occupation DC schemes
All pay into same pot and money gets allocated out to us once we retire
Occupational money purchase scheme (OMPS) - employer scheme in its own right
Executive pension plans (EPP) - separate scheme for senior staff
Small self administered schemes (SSAS) family businesses, every member has to be a trustee!
S32 - only designed to accept transfers in from other occupational schemes - cannot pay into it
Borrowing rules for SIPP and SSAS
Can only borrow to purchase commercial property and can only borrow 50% if net asset if the scheme
Example fund 200k and already had 40k borrowing can only borrow another 40k
SSAS loan rules to employer
Can borrow from pension pot, loan up to 50% of assets, must charge least 1% above base rate with 5 year maximum term that can be rolled over only if employer struggling to meet payments
Auto enrollment
Has to be offered to anyone who has a contract with one person
Can you opt out of auto enrollment
Yes but must be auto enrolled every 3 years
Auto enrollment - how much does each person pay
Employer 3%
Employer 5%
Categories of auto enrollment
Employers must let all employees know what category they are in
Eligible job holder - between 22-SPA earning over 10k
Non eligible job holders - between 22 -SPA earning between 6240 and 10k or anyone 16-22 or spa to 75 earning over 10k - can ask to join the scheme and employer must pay 3%
Entitled worker - can join but no entitlement - between 16 -75 earning less than 6240
In specie
When put property or non cash asset into a pension must be valued correctly if no tax charge on it
Tax relief for employers
Where employers significantly increase their pension contributions in comparison to previous years, there may be the need to spread the tax relief over multiple year
Have contributions exceeded 210% of the contributions in previous tax rates
Is the excess more than 110%
Is it more than 500k
500k to 999,999 - 2 accounting periods
1m to 1.999m - 3 accounting periods
Over 2m - 4 accounting periods
Critical yields
Relating to annuity - the amount of investment return needed after costs and charges to remain the same level of annuity
CY A is what need to match annuity
CY B is what need to beat annuity
Can give A on its own, cannot give B without A
Example
CY A want 10k per year would need to return 5%
CY B if want 12k a year would need to return 6.5%
Safe guarding benefits
Got to be a fund over 30k apploed to dB, section 32, gmps, guarantee annuity rates, guarantee fund values
Alternatives to pensions
Buy to let’s
ISA
Lisa
My own business
Eis seis vct
What is min number for a master trust
3
Statutory money purchase illustration
Needs to be provided when someone takes out a new or contributed to one. Includes all info on pension
Only pension scheme that does not need this is SSAS or dB scheme
Fact finding
Client factors to consider, capital and income, capacity for loss, attitude to risk, timeframes, ethical, asset allocation
Lifestyle fund
Switch asset allocation with view to move funds into cash near retirement to buy annuity - more old school
Lifestyle fund
Switch asset allocation with view to move funds into cash near retirement to buy annuity - more old school
What does swr mean
Safe withdrawal rate
What does swr mean
Safe withdrawal rate
How is small pots taxed
25% tax free, then 75% paid less 20% tax - if hrtp or artp must declare in self assessment
At what age do you stop recieving tax relief when pay into a pension
75
Transferring benefits to a qualifying recognised overseas pension scheme causes a
Benefits crystallisation event to occur
What do critical yields take into account
Mortality drag
dB transfer into SiPP
Main assumption is the discount rate to calculate the cost uses current gilt yeild investment returns and a product charge on .75%
When applying for pension credit how is an individuals existing personal independence payment treated when calculating their total weekly income
It is disregarded immediately
Lifestyle funds
Adjust automatically at predetermined dates
Can sipps accept in specie transfers of investment
Yes
Nest is an employer scheme
PPF of in payment get 100%
If not 90%
Serious I’ll health
Must be uncrytalsid
Must be under 75
Take all as lump sum tax free
