Lifetime Allowance Excess Charge - Nominating who pays?

Nath

Afternoon All

We have a client that may now be utilising 100% of her LTA allowance (she has fixed protection 16 so £1.25M). She also has a small NHS scheme circa £3k per annum plus approx £10K lump sum which will become payable in around 3 years at 60.

When the NHS pension is tested at 60 assuming she has used 100% of her LTA, this will obviously breach the LTA and the excess will be chargeable accordingly. Is the client able to tell the NHS that she would like to pay the excess LTA charge via her SIPP, rather than a possible reduction in pension from the NHS. I just wondered if this was an option?

Anyone had anything similar?

Thanks

N

Nath

Looking at the NHS website they state they pay and reduce the benefit but i'm just wondering if the client could state they would pay it via the SIPP. Thinking about it further I can't see it happening as client could say they would pay it and then not pay it, leaving NHS administrator potentially at fault for allowing it.

Jona

Yeah, aren't the scheme admin and member jointly liable for the tax. I would suspect in practice the NHS scheme would want to settle to discharge any potential liability......

richardgough

Just seen presentation from Curtis Banks. They specifically said they were offering a facility to pay LTA charges in respect of other DB schemes from clients SIPP.

Nath

Thanks Richard, funnily enough her SIPP is with Curtis Banks. However, as we can control the fact (leaving a bit of headroom in LTA now) that her DB won't get hit in 3 years at 60 and reduce the income, we can in affect ensure that the SIPP would be hit by any excess anyway and not reduce her NHS income.