Cashflow and the lifetime allowance test at age 75

mrspah

Hi, we have had a few defined benefit transfer enquiries recently where the total CETV has been around the Lifetime Allowance. We are using CashCalc to model sustainability of income but are a little unsure of how to model the LTA at age 75.

Currently, we move 100% of the PCLS into a savings account on CashCalc . Then at age 75 we deduct the intial funds in drawdown (exluding PCLS) from the value at age 75. The difference above the LTA is taxed at 25% and shown as a tax charge coming off at age 75. Is this reasonable? How are you dealing with it?

Thanks

arongunningham

Anything to do with Tax is in excess of CashCalc's capabilities. So I would use it alongside an excel spreadsheet or Voyant/Truth if you're into that sort of thing. 

Is it better to enter drawdown now or leave it until age 75 - there are a dozen more calculations for you to look at

Nathan

Not sure how to do it on cash calc, but don’t forget the LTA increases as well. 

richallum

You can work it out manually in excel and add a debit to the forecast at 75. We tend to use XPLAN for this as it handles it really well and doesn't show the tax as a personal expenditure item.