Enhanced PCLS from an EPP & LTA
Kris
Member
Hi all. New to the board and was hoping someone could kindly give me a bit of guidance on pension benefits as I've heard conflicting answers!
Basically, we have a client who has an EPP worth £660,000 which includes enhanced PCLS of £338,500 - this has been confirmed by the provider. He also has an uncrystallised SIPP worth £665,000. He has Fixed Protection 2014 at £1.5mil.
The client is thinking about withdrawing the enhanced PCLS of £338,500 from his EPP which will crystallise c44% of his £1.5mil LTA. Then, transfer the remaining capital into his SIPP. His remaining LTA is 56% of £1.5mil, so I thought 25% of the remaining LTA would be £210,000. Total PCLS from all sources = c£548,500.
However, one pension provider said his maximum PCLS from all sources will always be £375,000 ie 25% of the £1.5mil LTA.
So I'm not sure which is right. Can anyone confirm which is right?
Thank you for your help! Kris
Comments
It's 25% of the available LTA.
https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm063230
I think i'm right in saying, Benjamin, that the only time it can be more than 25% of 1.5m is if the TFC was higher than £375k at A-Day?
Here is a very good technical article from Prudential.
https://www.pruadviser.co.uk/knowledge-literature/knowledge-library/primary-protection-tax-free/
Thank you both for your input. Much appreciated.