Industry news and analysis

Pension FAQs

Commonly asked questions about Pensions.

 

Contributions & Tax Relief

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Can personal contributions be paid without tax relief to Scottish Widows personal pensions? Can employer contributions be paid for a director who does not pay themselves salary? Can a member of a personal pension continue to pay contributions after they leave the UK? Would a client be able to pay their redundancy cash payment into their pension? How does 60% tax relief work for those who have lost their personal allowance? Is higher rate tax relief automatic or is a claim needed? Can a member pay contributions into a pension scheme beyond age 75? Can a non-earner pay £3,600 pension contributions for this year and the last 3?
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Annual allowance and carry forward

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What is the annual allowance in 2017/2018? My client will exceed the annual allowance. What happens to the excess contributions? Are employer contributions tested against the annual allowance? My client wants to use carry forward. What does he need to tell HMRC? How does carry forward reduce the annual allowance charge? Do contributions always use up the annual allowance of the year in which they are paid? How do I work out the pension input period for a pension plan? How do I work out the pension input period for a pension plan before the 2016/17 tax year? How does carry forward from the transitional tax-year (2015/2016) work?
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Tapered annual allowance

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What is the tapered annual allowance? What are adjusted income and threshold income? What if only one of the adjusted income or threshold income levels is exceeded? Can carry forward from earlier years be added to the tapered annual allowance? Can a company owner on salary of £150k pay £100k employer contribution to avoid the taper? Is car benefit included in the tapered annual allowance income assessment? If salary sacrifice is renewed after 8 July 2015 does this affect the tapered annual allowance? How does the tapered annual allowance work if income is uncertain? Do I need to add new salary sacrifice contributions to adjusted income? Can 'scheme pays' be used where the tapered annual allowance is exceeded? Should employers cap high earners contributions at £10,000?
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Lifetime Allowance

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What level is the lifetime allowance currently set at? When are pension benefits tested against the lifetime allowance? How is the amount tested against the lifetime allowance calculated? If the LTA is £1m and someone vests £750k do they just have £250k remaining? When are pre A-day benefits tested against the lifetime allowance? Can the lifetime allowance charge be mitigated by moving into drawdown as early as possible? Can a lifetime allowance test be avoided by not taking benefits? What is the tax charge against benefits that exceed the lifetime allowance? Is it better to take a lifetime allowance excess as cash or income? What lifetime allowance protection options are currently available? How do Fixed Protection 2016 and Individual Protection 2016 operate? Is Fixed or Enhanced Protection lost if my client is automatically enrolled?
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Pension income options

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Can full tax-free cash be taken along with a partial pension encashment / UFPLS? My client wants their full s32 fund as a lump sum but cannot access it. What are the options?
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Tax-free cash

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Can protected tax-free cash be taken with the full fund via flexi-access drawdown? Can protected tax-free cash be taken alongside a partial pension encashment / UFPLS? Taking protected tax-free cash from an EPP will force my client to buy an annuity? What can we do? My client's A-day tax-free cash was above 25%. Is this percentage protected automatically? Does a block transfer have to go to a GPP to meet the 'same receiving scheme' requirement? Is the maximum tax-free cash under a defined benefits scheme 25% x (20 x scheme pension)?
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Death benefits

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How are death benefits paid from crystallised pensions taxed? How are death benefits paid from uncrystallised pensions taxed? If the recipient of tax-free death benefits dies post age 75 do they remain tax-free? Can a member of an occupational pension use a bypass trust?
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Death benefit nominations

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How do schemes trustees determine who receives death benefits? Who is and who is not entitled to receive beneficiary drawdown? What is the definition of a dependant, a nominee and a successor? Can beneficiary drawdown be re-directed to a non-dependent beneficiary? Is there a solution where the Scottish Widows pension does not offer beneficiary drawdown? Can I insist my beneficiary receives drawdown rather than a lump sum for inheritance tax reasons? How do I make sure the beneficiary receives drawdown to limit how much they spend? Will including everyone on the nomination form ensure there are no restrictions? Can a spouse and adult children be nominated 98%/1%/1% to receive beneficiary drawdown?
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Salary exchange

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Can an employee sacrifice their full month's salary in to their pension scheme?
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Miscellaneous

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My client has debts and is worried that his pension will be reduced. Will annuity purchase help?
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Money purchase annual allowance

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What is the MPAA and what level is it set at? What triggers the MPAA? From when does the MPAA apply? Do all schemes have to be notified that the member has triggered the MPAA? Can carry forward by used with the MPAA? Can 'Scheme Pays' be used to settle an MPAA excess tax charge? Does the MPAA apply to final salary schemes? How does the MPAA restriction work where the tapered annual allowance applies?
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Scottish Widows Limited. Registered in England and Wales No. 3196171. Registered office in the United Kingdom at 25 Gresham Street, London EC2V 7HN. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Financial Services Register number 181655.

Scottish Widows Unit Trust Managers Limited. Registered in England and Wales No. 1629925. Registered Office in the United Kingdom at Charlton Place, Andover, Hampshire SP10 1RE. Tel: 0345 300 2244. Authorised and regulated by the Financial Conduct Authority. Financial Services Register number 122129.

HBOS Investment Fund Managers Limited, registered in England number 941082. Registered office in the United Kingdom at Trinity Road, Halifax, West Yorkshire HX1 2RG. Authorised and regulated by the Financial Conduct Authority. Financial Services Register number 119223.

Scottish Widows Bank is a trading name of Lloyds Bank plc. Registered office: 25 Gresham Street, London EC2V 7HN. Registered in England and Wales, no. 2065. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority under number 119278.

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