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What is the most tax-efficient way to manage the Lifetime Allowance?

This reader is looking for ways to mitigate LTA charges
What is the most tax-efficient way to manage the Lifetime Allowance?

I took voluntary redundancy about three years ago (I am now 67). I also transferred out of my defined-benefit (DB) pension, and the transfer-out valuation at £1.2m was just above the lifetime allowance (LTA) limit. Given I was only just over the limit and the LTA was due to increase with consumer price index (CPI) inflation I was not overly concerned about deciding the best way forward. However, with the LTA now frozen for five years I feel a need to make some plans and not to ignore the situation. At present, I have taken £200,000 into drawdown, and of the £50,000 tax-free lump sum £20,000 went back into an individual savings account (Isa). I am withdrawing a pension of £48,000 per year and the fund is currently valued at £1.4m.

My question is are there any tax-efficient ways to take funds out of the scheme to mitigate LTA charges other than moving all the funds into drawdown and taking the remaining tax-free money? JN

Kay Ingram, a chartered financial planner, replies:

First, let's look at what the LTA charge is. The LTA seeks to limit the tax advantages of pension savings for each individual currently at £1,073,100. These include:

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