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PCLS additional protected tax-free cash
Posted: November 21st, 2021, 4:57 pm
by MyNameIsUrl
I'm planning to take the maximum tax-free cash from one of my pension pots to put it all into drawdown. The provider tells me I have an additional protected tax-free amount of some 9k over and above the normal 25%.
Sounds like good news - but are there any issues I should be aware of, particularly in respect of LTA calculations?
Re: PCLS additional protected tax-free cash
Posted: November 22nd, 2021, 9:23 am
by ursaminortaur
MyNameIsUrl wrote:I'm planning to take the maximum tax-free cash from one of my pension pots to put it all into drawdown. The provider tells me I have an additional protected tax-free amount of some 9k over and above the normal 25%.
Sounds like good news - but are there any issues I should be aware of, particularly in respect of LTA calculations?
Although the calculation of the value of the protected PCLS is complicated and has a few quirks see
https://www.adviser-edge.bmogam.com/wp- ... -final.pdf
the fraction of the LTA limit used up will as far as I am aware still be
(Total value of pot) / (Current LTA limit)
( or
(Total value of pot) / (protected LTA limit)
if you had opted to take some level of LTA protection.
Of course if you had taken the original enhanced protection and still satisfied the conditions (no contributions after A-day etc etc) then there would be no possibility of a charge for exceeding the LTA limit.
https://techzone.abrdn.com/public/pensi ... protection
)