#CAPPED DRAWDOWN PENSIONS FULL#

This means the standard lifetime allowance can range from more than £1 million but no more than £1.25 million This means the standard lifetime allowance can range from more than £1.25 million but no more than £1.5 millionįixes the standard lifetime allowance at £1.25 millionįor members with pension savings valued over £1 million on 5 April 2016 - fixes the standard lifetime allowance at a relevant amount (the value of the member’s pension savings on 5 April 2016) capped at £1.25 million Where a BCE has occurred, you’ll need to know the lifetime allowance for:įixes the standard lifetime allowance at £1.8 millionįixes the standard lifetime allowance at £1.5 millionįor members with pension savings valued over £1.25 million on 5 April 2014 - fixes the standard lifetime allowance at a relevant amount (the value of the member’s pension savings on 5 April 2014) capped at £1.5 million If you had more than one pension in payment on 5 April 2006, you should include the total of the values of each pension. This is known as amount A, and is the annual rate at 5 April 2016. Income taken from pensions before 6 April 2006 To do this you may need to work out if you’ve taken any money from the pension scheme - known as a benefits crystallisation event ( BCE). If your pension scheme administrator cannot provide this information you’ll need to work it out. money (which gained UK tax relief) you put into an overseas pension between 6 April 2006 and 5 April 2016.value of pensions you have not taken yet.lifetime allowance you used between 6 April 2006 and 5 April 2016.

income you’ve taken from pensions before 6 April 2006.This is the amount you can continue to save into your pension each year and still get tax relief.To apply for individual protection from the 2016 reduction in lifetime allowance you need to tell HMRC the:

#CAPPED DRAWDOWN PENSIONS FULL#

One benefit of sticking with capped income drawdown is that you retain your full annual allowance of £60,000. Applying to transfer your capped drawdown arrangement to flexi-access drawdown, which may or may not be with the same provider depending on whether your provider permits flexi-access drawdown.Breaching the cap you were previously subject to under capped drawdown, which automatically converts you to flexi-access drawdown.You don’t have to move out of capped drawdown if you don’t want to. However, if you were in capped income drawdown contract you won’t have been switched over automatically and you have a decision to make. That’s why it was renamed flexi-access drawdown. Capped income drawdown is closed to new members.Īnyone who was previously using flexible drawdown was automatically converted to flexi-access drawdown after the new pension freedoms.

The pension freedoms removed this income divide for pension drawdown and offered everyone who wanted to use it flexible access to their pension. Converting Capped Drawdown To Flexi-Access Drawdown Those without this income had to use capped drawdown, which placed a limit on the amount that you could draw down from your pension of 150% of a single life annuity that a person of the same age could purchase based on Government Actuary’s Department (GAD) rates. However, it was only available for those with a guaranteed retirement income elsewhere of £12,000. Given that drawdown was first introduced more than 20 years ago, it’s not surprising that many people who entered into drawdown pension contracts before the April 2015 pension freedoms might be wondering what happens to their pension now.īefore the pension freedoms there were two drawdown options: capped income drawdown and flexible income drawdown.įlexible drawdown is most similar to today’s new flexi-access drawdowncontracts in that it didn’t place a restriction on how much of your pension you could take as income.

Capped drawdown pensions