NHS pension and lifetime allowance
Posted: November 29th, 2016, 12:25 pm
I am a current member of the NHS pension scheme (1995 and 2015 sections). I also have a SIPP. Together the current value is about £750k and I am 50. I intend to take the NHS 1995 pension when I turn 60 and the 2015 pension at the earliest point I can take it without incurring penalties. The SIPP probably won't be drawn down, perhaps ever.
I think it is quite likely (or certainly possible) that I will exceed the 1m LTA limit across all pensions by the time I am 60 but I think it extremely unlikely/impossible that my NHS pension on its own will reach the LTA. I'm likely to stop NHS employment within the next 5 years. I definitely want to stay in the NHS pension for as long as I can.
Can anyone explain how and when I would be liable to pay the excess tax if I do breach the limit? I want to avoid paying the charge on the NHS pension if at all possible, but I'm fairly relaxed about paying it from the SIPP if necessary.
Would it be advisable to stop paying into the SIPP? I do it because it increases the proportion of my assets that are tax sheltered and also because it preserves my child benefit payments. I don't mind paying the excess charge from the SIPP eventually, given that it's likely that I won't draw it down in my lifetime but will pass it on to heirs, and I don't think (?) it compares badly to paying IHT on it.
If anyone can explain the nuts and bolts of how the calculations and payments work, that would be extremely helpful.
I think it is quite likely (or certainly possible) that I will exceed the 1m LTA limit across all pensions by the time I am 60 but I think it extremely unlikely/impossible that my NHS pension on its own will reach the LTA. I'm likely to stop NHS employment within the next 5 years. I definitely want to stay in the NHS pension for as long as I can.
Can anyone explain how and when I would be liable to pay the excess tax if I do breach the limit? I want to avoid paying the charge on the NHS pension if at all possible, but I'm fairly relaxed about paying it from the SIPP if necessary.
Would it be advisable to stop paying into the SIPP? I do it because it increases the proportion of my assets that are tax sheltered and also because it preserves my child benefit payments. I don't mind paying the excess charge from the SIPP eventually, given that it's likely that I won't draw it down in my lifetime but will pass it on to heirs, and I don't think (?) it compares badly to paying IHT on it.
If anyone can explain the nuts and bolts of how the calculations and payments work, that would be extremely helpful.