The Lemon Fool

I am approaching 55 and whilst no immediate plans to retire, I am considering taking the 25% TFLS and investing elsewhere, here is my rationale:

I have stopped making pension contribution as impacted by LTA and taper relief.
I have fixed protection at £1.25m and my SIPPs are currently worth £1.25m.
I am concerned that a future government will reduce the ability to take TFLS.

I am trying to establish any reasons why I should defer, apart from tax liability on investment outside SIPP, mitigated by maximum ISA allowance and otherwise capital growth shares or IT's as opposed to high dividends.

Any comments or suggestions welcome.

There may be a general Election on the way. There could be a Labour/Liberal/SNP coalition government. The LibDems have a policy (I seem to remember) of limiting the size of TFLS you can take.

So there's a reason to bolt. But suppose that such a government also restricted the amount you could pop into an ISA annually, or in total. That might be a reason not to bolt. Some people have a handy tax shelter called a spouse. That might be worth thinking about.

SoBo65 wrote:I am trying to establish any reasons why I should defer, apart from tax liability on investment outside SIPP, mitigated by maximum ISA allowance and otherwise capital growth shares or IT's as opposed to high dividends.

The only reason that I could think of would be if you plan to use your SIPP not as a pension, but rather as an IHT bypass mechanism.

I'm in more or less the exact same situation, right down to the FP2016. I am crystallising my pensions now, taking the maximum TFLS, and reinvesting this in similar assets, just in ISAs and general trading accounts. For me, the logic is less a worry about the PCLS being crimped or other political risks with pensions -- though there are certainly plenty of these -- but rather the fact that the tax on gains from investments held outside a SIPP that is above the LTA is virtually certain to be lower than the LTA penalty rate if left in that SIPP. Once it hits the LTA, an uncrystallised pension flip-flops from tax shelter to tax ball-and-chain.

I should have added hat there no IHT considerations, we have no children, so the plan is anything left when we both die aged 100 will be within the tax free nil band......

I am 55 in 130 days and counting.

They had better not change the rules - I am now in FIRE after 5 years of planning and this is a critical last part of my master plan.....

Regards

Pheid