excess pension commencement lump sum and MPAA
Wildparaplanner
Member
Hi all,
A client with a protected pension age of 35 has been given an at retirement pack (at age 36). The option to take the maximum PCLS appears to be a blanket 25% of the fund, meaning they state:
"I would like to take the estimated Tax Free Cash Lump sum of £147,551.25 plus the excess Penson Commencement Lump Sum of £22,234.63 and leave the remainder of my fund invested in the scheme"
There are two other options which involve taking taxable lump sums on top and the paperwork rightly states that this is a trigger event for the MPAA. However, there is no suggestion that the first option (above) is a trigger for the MPAA.
Is this right? Given the excess PCLS is taxable, is this not a trigger event as it comes from uncrystallised funds?
Thanks
Comments
If it's not a trigger event listed then it doesn't trigger MPAA https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm056520. Taxable income isn't in itself a trigger event.
If this is one of the new pension commencement excess lump sums then I don't believe they are legal in money purchase schemes (as an UFPLS could be paid instead)and if they have an option of staying invested i.e. drawdown it must be a money purchase scheme.
Thanks Les,
It's a hybrid scheme:
• Cash Section (Contracted In DB Scheme)
• Income Section (Contracted In Money Purchase Scheme)
• 2011 Section (Contracted In Money Purchase Scheme)
Cool - must be related to the DB section then.