Pensions again - measuring growth in DC scheme
Discussion
Hi
Am I right in thinking that growth for pension AA purposes is calculated in a DC pension by simply measuring the inputs from individual and/or employer not by how much it goes up each year according to the success of its fund managers investments?
I have a longstanding DB work pension and also put a smaller amount away each month into a FSAVC which I stopped paying into several years ago.
My concern is that I am now flirting with the AA taper with work pension but am 'safe' however significant growth in the FSAVC will soon have me facing a tax bill if Im wrong.
Also I will exceed the LTA somewhere just before I choose to retire and so assuming any growth of the FSAVC wont cause me pain I have little to lose in transferring it into a riskier fund as it will get hammered anyway when I breach LTA - its a modest amount, Im not that reckless
Cheers, and thanks in advance
That's right - for DC schemes it is new contributions only. Investment growth on the existing fund does not count towards the Annual Allowance.
Re breaching the LTA, I'm in a similar position - I'm very likely to breach before I retire. My take on it is that it is not symmetrical (i.e. I get a smaller proportion of high returns than I get of low returns) so it makes less sense to take investment risk and I might as well play it a bit more safely. But almost all of my pension fund is DC so quite a different position from you where you have only a small proportion in DC.
Re breaching the LTA, I'm in a similar position - I'm very likely to breach before I retire. My take on it is that it is not symmetrical (i.e. I get a smaller proportion of high returns than I get of low returns) so it makes less sense to take investment risk and I might as well play it a bit more safely. But almost all of my pension fund is DC so quite a different position from you where you have only a small proportion in DC.
Zigster said:
That's right - for DC schemes it is new contributions only. Investment growth on the existing fund does not count towards the Annual Allowance.
Re breaching the LTA, I'm in a similar position - I'm very likely to breach before I retire. My take on it is that it is not symmetrical (i.e. I get a smaller proportion of high returns than I get of low returns) so it makes less sense to take investment risk and I might as well play it a bit more safely. But almost all of my pension fund is DC so quite a different position from you where you have only a small proportion in DC.
Surely it makes sense to determine your retirement objectives first (e.g. how much money do you need and at what points) before planning how to minimise tax?Re breaching the LTA, I'm in a similar position - I'm very likely to breach before I retire. My take on it is that it is not symmetrical (i.e. I get a smaller proportion of high returns than I get of low returns) so it makes less sense to take investment risk and I might as well play it a bit more safely. But almost all of my pension fund is DC so quite a different position from you where you have only a small proportion in DC.
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