The LTA is an amount an individual can be paid through pensions over their lifetime before triggering additional tax's.
The LTA includes any lump sums paid out regardless of them being tax free or not.
What I'm struggling with is the LTA Protection issue. This seems to have reduced in recent years and is not aligned with any inflationary index that I can identify.
Would I be correct in assuming that I could [potentially] arrive at the other end with too large a pension pot?
I've got a lovely spreadsheet all working now. Taken me a few months to refine it. It allows me to punch in variables and see an outcome. Don't get me wrong I'm more than aware it's not a magic crystal ball I've invented. It's more a ball park guide to where I will end up dependant upon amount saved, annual returns and the period of investment. It also factors in draw down impact upon the crystallisation event and I can vary the draw down percentage. I have left this at 4% being the "advisory" maximum draw down. It also factors in state pensions and assumes tax will be paid at 20% on all income above personal allowances (noting the latter is far more complicated but I wanted the spreadsheet to guide my decisions now, not to become a work of art in assessing all things all the time). The spreadsheet also allows me to inflate the tax allowances and state pensions and I have set them all to 1% pa over the next 15 years. I have not bothered with costs of managing the funds as I can reduce the projected growth of the fund to include these.
But the question I have asked myself now is could I over commit to pension contributions at the expense of "living today" and or considering another savings vehicle such as an ISA.
I currently like the pension route as I have a head-start in that area already. Also my employer will contribute to my pension too. Under these circumstances I can contribute about £20K pa to my pension including employer contributions and tax rebates. If I go down the ISA route that figure will reduce quite significantly. I also think upon passing the pension (which is private) will pass to my good lady if she outlives me or my daughter if not. And that will be tax free until they draw down from it?
Again if I have understood all of the above correctly then I think I should consider maximising my pension contributions until I reach a "self sustaining" pension pot and then changing to an ISA or doing both from the outset now.
What I'd like to do is be able to live in the meantime (of course
![Rolling Eyes :roll:](./images/smilies/icon_rolleyes.gif)
Have I sort of got the correct grip on the outline or have I missed something super duper important?
Thank you in advance
AiY