SIPP Seminars 2012 #SIPPS2012 This is not a consumer advertisement, it is intended for professional...
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Transcript of SIPP Seminars 2012 #SIPPS2012 This is not a consumer advertisement, it is intended for professional...
![Page 1: SIPP Seminars 2012 #SIPPS2012 This is not a consumer advertisement, it is intended for professional financial advisers and should not be relied upon by.](https://reader038.fdocuments.us/reader038/viewer/2022110208/56649ddf5503460f94ad906f/html5/thumbnails/1.jpg)
SIPP Seminars 2012 #SIPPS2012
This is not a consumer advertisement, it is intended for professional financial
advisers and should not be relied upon by private customers or any other
persons
![Page 2: SIPP Seminars 2012 #SIPPS2012 This is not a consumer advertisement, it is intended for professional financial advisers and should not be relied upon by.](https://reader038.fdocuments.us/reader038/viewer/2022110208/56649ddf5503460f94ad906f/html5/thumbnails/2.jpg)
• Suffolk Life is the trading name of Suffolk Life Pensions Limited (registered in England and Wales number 1180742) and Suffolk Life Annuities Limited (registered in England and Wales number 1011674).
• Both are authorised and regulated by the Financial Services Authority.• The registered address of both companies is 153 Princes Street, Ipswich,
Suffolk IP1 1QJ.• Telephone calls to Suffolk Life are recorded for training, monitoring and
fact verification purposes.• Suffolk Life provides, operates and administers self-invested personal
pensions and similar pension products.• Information regarding tax and practice is based on Suffolk Life's
understanding at the time this presentation was put together of legislation and HM Revenue and Customs policy. Legislation and HM Revenue and Customs policy and practice may change in the future.
• This presentation is for adviser use only and is not to be used with clients.
• Tel: 0870 414 7000 Fax: 0870 414 8000• Web: www.suffolklife.co.uk• E-mail: [email protected]
![Page 3: SIPP Seminars 2012 #SIPPS2012 This is not a consumer advertisement, it is intended for professional financial advisers and should not be relied upon by.](https://reader038.fdocuments.us/reader038/viewer/2022110208/56649ddf5503460f94ad906f/html5/thumbnails/3.jpg)
End of Tax YearPensions Checklist
Claire BrooksPensions Technical Manager
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Agenda
• Carry Forward
• Fixed Protection
• Protected rights
• Flexible drawdown
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Carry Forward
![Page 6: SIPP Seminars 2012 #SIPPS2012 This is not a consumer advertisement, it is intended for professional financial advisers and should not be relied upon by.](https://reader038.fdocuments.us/reader038/viewer/2022110208/56649ddf5503460f94ad906f/html5/thumbnails/6.jpg)
April 19, 2023
Carry forward basics
£10k
£35k
£25k
£50k
2008-09 2010-11 2011-122009-10
£40k
£25k
£15k
Maximum tax relievable contributions for
2011-12
£130,000
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April 19, 2023
The rules
• Must have been a member of a scheme in the year in which carry forward is being carried from
• Must have earnings to support personal contributions in the year in which they are paid– Not the year they are carried forward from– Not an issue for employer contributions
![Page 8: SIPP Seminars 2012 #SIPPS2012 This is not a consumer advertisement, it is intended for professional financial advisers and should not be relied upon by.](https://reader038.fdocuments.us/reader038/viewer/2022110208/56649ddf5503460f94ad906f/html5/thumbnails/8.jpg)
April 19, 2023
PIPs and carry forward
• Pension input periods need not be aligned to tax year
• Not as simple as looking at what was paid in each tax year
• Can manipulate PIPs to get extra contributions in for higher earners
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April 19, 2023
Example of PIP issues
Date Contributions
5/4/2008 25,000
5/4/2009 10,000
6/4/2010 15,000
1/11/2010 25,000
5/4/2011 5,000
Tax Year
2007-2008
=£25,000
2010-2011£45,000
Calendar year
2009-2010=10,000
2008-2009
=25,000
2011-12 annual allowance remaining
£145,000 £120,000
2011-2012£5,000
2010-2011=40,000
2008-2009=£10,000
2009-2010=£Nil
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April 19, 2023
Changes to carry forward
Pension input period Contribution Previously New guidance
2008-2009 25,000 +£25,000 +£25,000
2009-2010 55,000 -£5,000 Nil
2010-2011 48,000 +£2,000 +£2,000
Amount to carry forward £22,000 £27,000
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April 19, 2023
Reduction in Lifetime allowance• Use carry forward before applying for Fixed Protection if possible
• Tax year counts for Fixed Protection
• PIP counts for contribution
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April 19, 202310 January 2012
Fixed Protection
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April 19, 2023
Reminder about A-day protections• Enhanced, Primary and Scheme Specific TFC
• Lifetime allowance will remain at £1.8m when used to calculate multiples – Primary protection
• Also remains at £1.8m for Pension Commencement Lump sum calculations
• Will increase only when LTA increases above the £1.8m
• Examples in RPSM have recently been updated – be careful they were incorrect
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April 19, 2023
What is Fixed Protection?• Protection from the reduction in the Lifetime allowance
• Can not apply if you have primary protection, no option to give it up
• If you have enhanced you must give it up before applying for fixed
• Protection application deadline 5 April 2012
• Not just for those with uncrystallised funds
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April 19, 2023
Crystallised fund example• Bob aged 71, consolidated all pensions into SIPP
• Crystallises 1.35 Million into Capped Drawdown
• Uses 75% of the Lifetime allowance, leaves 25% unused
• Takes PCLS of £337,500 and no income
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April 19, 2023
What happens at age 75 - no protection• Bobs fund had increased from 1.0125 Million (net of PCLS) to 1.45 Million
in June 2015 when he reaches 75
• BCE 5a – (1.45-1.0125) = £437,500
• Remaining lifetime allowance = 25% of 1.5M = £375,000
• So excess charge on £62,500
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April 19, 2023
What happens at age 75 - fixed protection• Bobs fund had increased from 1.0125 Million (net of PCLS) to 1.45 Million
in June 2015 when he reaches 75
• BCE 5a – (1.45-1.0125) = £437,500
• Remaining lifetime allowance = 25% of 1.8m=£450,000
• No excess charge
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April 19, 2023
Loss of fixed protection after vesting• Fund value of 1.45m in 2011-12
• Applies for fixed protection
• Fund value increases to 1.7m by June 2013
• Crystallises 1.44m = 80% of LTA
• Leaving 20% of LTA (currently £360,000)
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April 19, 2023
Loss of fixed protection after vesting• Contributes on 6 April 2014, Loses Fixed protection informs HMRC
• 1 June 2014 – crystallises remaining fund of now £400,000
• Has remaining LTA of 20% of 1.5m to use = £300,000
• Only has LTA charge on £100,000
• If he had not applied for fixed only 4% of LTA would remain– LTA charge on £340,000
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• If you clients are not contributing and looking to take benefits soon, why not apply
• There appear to be no downsides to applying
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Protected Rights
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April 19, 202310 January 2012
What is happening
• 6th April 2012 – they no longer exist
• No contracted out rebates to money purchase schemes
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April 19, 202310 January 2012
We are talking small pots?• No!
Example: • Joined final salary scheme is 1997• Left in 2010• Final salary of £80,000• 1/60th scheme• Age 50
• Pension at leaving 17,333 pa• Estimate of CETV could be £300,000
![Page 24: SIPP Seminars 2012 #SIPPS2012 This is not a consumer advertisement, it is intended for professional financial advisers and should not be relied upon by.](https://reader038.fdocuments.us/reader038/viewer/2022110208/56649ddf5503460f94ad906f/html5/thumbnails/24.jpg)
April 19, 202310 January 2012
What this means?
• Can be used for Flexible Drawdown
• No restrictions on the type of annuity, if purchased – may be able to purchase larger annuity
• No death benefit restrictions
• Less paperwork and reporting requirements
![Page 25: SIPP Seminars 2012 #SIPPS2012 This is not a consumer advertisement, it is intended for professional financial advisers and should not be relied upon by.](https://reader038.fdocuments.us/reader038/viewer/2022110208/56649ddf5503460f94ad906f/html5/thumbnails/25.jpg)
Flexible Drawdown
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Things to remember
• No contributions in the year you enter flexible drawdown
• No Annual allowance thereafter
• MIR must be received in the tax year
• Proof is required
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Summary
• Fixed protection – don’t wait
• Carry forward – are they missing out?
• Flexible drawdown – Don’t forget, stop contributions!
![Page 29: SIPP Seminars 2012 #SIPPS2012 This is not a consumer advertisement, it is intended for professional financial advisers and should not be relied upon by.](https://reader038.fdocuments.us/reader038/viewer/2022110208/56649ddf5503460f94ad906f/html5/thumbnails/29.jpg)
• Suffolk Life is the trading name of Suffolk Life Pensions Limited (registered in England and Wales number 1180742) and Suffolk Life Annuities Limited (registered in England and Wales number 1011674).
• Both are authorised and regulated by the Financial Services Authority.• The registered address of both companies is 153 Princes Street, Ipswich,
Suffolk IP1 1QJ.• Telephone calls to Suffolk Life are recorded for training, monitoring and
fact verification purposes.• Suffolk Life provides, operates and administers self-invested personal
pensions and similar pension products.• Information regarding tax and practice is based on Suffolk Life's
understanding at the time this presentation was put together of legislation and HM Revenue and Customs policy. Legislation and HM Revenue and Customs policy and practice may change in the future.
• This presentation is for adviser use only and is not to be used with clients.
• Tel: 0870 414 7000 Fax: 0870 414 8000• Web: www.suffolklife.co.uk• E-mail: [email protected]