Lifetime Allowance Planning

MasterClass

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Scottish Widows logo (a hooded woman) - with the caption 'Masterclass, Lifetime Allowance'.

In this recorded MasterClass from 24 May 2017 we'll share our technical guidance on Lifetime Allowance planning and provide practical examples on topics including:

  • a reminder of the LTA protection options
  • the second LTA test
  • the LTA and death benefits/estate planning
  • employer considerations.
  • Case studies looking at options for those at and above the LTA.

By the end of this MasterClass you will be able to explain:

  • the events that trigger a lifetime allowance charge
  • the lifetime allowance protection options
  • the 2nd Lifetime Allowance test for drawdown funds.
  • Operator: Good day, ladies and gentlemen, and welcome to the Scottish Widows Lifetime Allowance MasterClass Conference Call. Today's conference is being recorded. To ask a question throughout today's call, you may submit your question via the web tool on the 'Ask a Question' box. At this time, I'd like to turn the conference over to Simon Harris. Please, go ahead, sir.

    Simon Harris: Thank you, Suzanne, and good morning everybody and welcome to the latest Scottish Widows TechTalk MasterClass. In a couple of minutes, Chris Jones and Tom Coughlan, from the Scottish Widows Financial Planning team will be taking us through a presentation, covering the lifetime allowance. The impact of the lifetime allowance is becoming more widespread, through a combination of reducing limits and increased values, particularly through defined benefits.

    A greater number of individuals will potentially find themselves liable for a lifetime allowance charge. According to HMRC figures at the end of last year in 2015-16, over £120 million was collected through the lifetime allowance charge, more than a 60% increase from the previous year, with more people being subject to the charge. So following the reduction to the limit in 2016, it is likely the amount collected will only increase.

    And in the press, we see pressure mounting from the likes of the ex-Pensions Minister, Ros Altmann, to remove the lifetime allowance altogether, arguing amongst other areas the disparity between defined benefit and defined contribution testing. However, following comments from the current Pensions Minister, Richard Harrington, last month, it seems likely that the lifetime allowance will remain in place for the time being.

    So going forward, a sound knowledge around the detail, and how to plan around the lifetime allowance for your clients, can help mitigate its impact. But with 13 benefit crystallisation events to consider, it can be a complex area. Additionally, as limits have changed and indeed, when the lifetime allowance was first introduced in 2006, individuals have been able to apply to protect their benefits where they would otherwise be disadvantaged by reductions to the limits.

    Chris and Tom will be reviewing the different forms of protection available, along with the qualifying rules, plus other aspects of the lifetime allowance, highlighting the key points and where you can help minimise any charge. As with other pension areas, the Scottish Widows Financial Planning team offers a great deal of support and following the presentation, Sandra Hogg will be letting you know where you can find more information.

    The presentation this morning is scheduled to last for about 30 to 35 minutes, following which there will be time for any questions you have. A recording of today's presentation will also be made available on the Scottish Widows Advisor Extranet, should you wish to review the content again, and CPD certificates will also be issued following the presentation. I would now like to hand over to Chris, to start today's presentation.

    Chris Jones: Thank you, Simon. Good morning, everyone. The lifetime allowance places a limit on the amount of tax benefit individuals can receive from their pension plans. With an LTA, now of just £1 million, more and more clients are affected, and it adds another complication to retirement planning, and with an LTA charge of up to 55%, anything that can be done to manage it will be welcomed by clients. So today, we're going to provide reminder of LTA tests.

    We'll then focus on the second lifetime allowance test, one that's becoming more important as more clients choose drawdown. We'll then provide a reminder of the protection options the clients may already have, and those they can still apply for. We'll then look at how LTA charge interacts with using your pension for IHT planning and consider some further planning points, and round that up with a case study at the end.

    The lifetime allowance introduced at A-day was £1.5 million and the intention was always that it would increase each year and it did so for the first few years, up to £1.8 million. It's then been reduced to £1.5 million, £1.25 million, and now the £1 million we have now. It's due to rise in inflation from next year on. We've assumed 2.5% inflation, which shows that if you have any type of protection, it will take a long time to get back above that £1.25 million amount.

    There are 13 lifetime allowance tests and these occur whenever you take benefits from your pension plan, unfortunately there are also tests even if you don't take them. There are tests under BCE5, which apply at age 75, if you choose not to, or if you previously crystallised into drawdown. Each time you take some benefits, it uses a percentage of the lifetime allowance. For example, if the client takes £100,000 tax-free cash in the current year and then £300,000 into drawdown, the tax-free cash will use up 10% of the lifetime allowance. The drawdown uses up 30% of the lifetime allowance. And each time you do so, it's done on the percentage of the lifetime allowance, at the time you take those benefits. Importantly, no charge can occur until all of your lifetime allowance has been used up. Where there is an excess, there's an LTA charge of 55% where it is paid as a lump sum, or 25% if it's paid as income. The rates are broadly neutral for a higher rate taxpayer.

    When this was first introduced, it was very likely that any income taken in excess of the lifetime allowance would be subject to higher rate tax. Now that the LTA is so low, combined with the tax planning options that affects excess drawdowns, this may not always be the case, and can make the 25% option more attractive. Any LTA charge during lifetime is deducted by the scheme, before benefits are paid out as a lump sum, before being moved into drawdown or as pension benefits.

    On death, it is accounted for by your personal representative and paid by the person receiving those benefits. Just have a look at how the charge applies, certainly, to a money purchase scheme. So an example here, when somebody's already used 80% of their lifetime allowance, that they still have £400,000 of benefits to crystallise. They have £200,000 available; the maximum tax-free cash is 25% of that available £200,000, so that's £50,000.

    The rest of the amount is moved into drawdown and the 25% charge is applied, so that is 25% on the excess, which is also £200,000. So £50,000 is deducted by the scheme, paid over to HMRC, and the rest remains in the drawdown fund and how that fund is withdrawn. If it's withdrawn, it's subject to tax at the normal income tax rates.

    The DB scheme is slightly different. The valuation is based on a relatively generous 20 times the first year's pension, plus any tax-free cash paid. And often, tax-free cash is taken by commutation. So an amount of pension is given up in exchange for that tax-free cash. This can mean that the lifetime allowance is charge is a variable amount, depending on the commutation factor used. We have a similar situation here as in the previous one, but with defined benefits.

    Here, they will also use the same available lifetime allowance where they have £25,000 maximum pension scheme available. They decided to swap that for the maximum tax-free cash of £50,000. That reduces their benefits down to £21,667. So then you can apply that formula, 20 x £21,667 + £50,000 tax-free cash. It means that that benefit crystallisation is £483,000. They had £200,000 remaining, so you deduct that.

    You then apply the charge of 25%, but differently because that approximately £78,000 now rather than being a cash amount, will affect the member in an actuarial reduction in the pension they received. So you do the calculation before the reduction, so then that £21,667 will be reduced by whatever they actually deem appropriate to use.

    I'm now going to pass over to Tom, who's going to take a look at the second lifetime allowance test.

    Tom Coughlan: Thank you, Chris. Good morning, everyone. The second lifetime allowance test is included within the list of BCE's on the previous slide, but it does deserve it’s own separate explanation, hence, a slide dedicated to just that. It's become increasingly relevant as the lifetime allowance has reduced from as high as £1.8 million, now down to £1 million and also the increased flexibility of drawdown which now allows you in recent years to just move across the drawdown and to not take any income at all.

    Essentially, it allows you to move into drawdown without taking any benefits. The idea of the second lifetime allowance test is just to look at the growth, after you've designated and test this against the LTA at annuity purchase or age 75. It is just the monetary increase though, so it does ignore any withdrawals that you take, which then allows you to plan by using withdrawals to help to mitigate the charge, and we have a case study at the end, which goes through that.

    The test is under BCE 4 if you use drawdown to purchase an annuity; or if you reach age 75 holding a drawdown fund then it's tested under BCE 5A. The purpose of the second lifetime allowance test is simply just to prevent members avoiding the lifetime allowance test on their fund growth, just by moving across to drawdown. So in the absence of this rule, you could move your fund across to drawdown at age 55 and you could then have 20 years of growth up to 75 which was outside of the scope of the lifetime allowance. That's what HMRC used this rule for.

    So the process would be that you would crystallise your fund into drawdown. That means you will take tax-free cash and the rest is then designated across to a drawdown account. So if you had a £100,000 fund, say, and ordinarily you would take £25,000 of that as cash and it's the remaining £75,000 that would go into drawdown.

    So it's only the £75,000 that you're concerned with and it's the growth on that amount that matters. So then what happens from then on is important, the growth in the fund, but also whether or not you take income. If no income is taken, then the fund is more likely to grow whereas if you draw income from that fund, then that will restrict the growth.

    Some other points just to mention about the second lifetime allowance test. So death doesn't trigger the second lifetime allowance test, which is important for those in ill health and also a pre A-day drawdown is not tested, either. And the reason being that the actual drawdown, itself, is not tested against the lifetime allowance, at least not in a way that generates a charge. So there's no need to test the growth in the drawdown, either. And that's one reason why you can't merge drawdown funds because you would then have to have a mechanism in place to be able to keep pre- and post A-day drawdown separate for the purpose of the second lifetime allowance test.

    Just to go through the graphic on the slide there, so tax-free cash taken at 2017, the remainder has to be utilised to provide an income option. Flexi-access is one of those options, and then moving forward to the second lifetime allowance test, this time at age 75 which is 10 years later, then it's just the growth in the fund that you're looking at. You don't test the whole fund again. So a client with a £1 million fund, under current rules they would take £250,000 as cash, £750,000 in drawdown.

    That would utilise 100% of the lifetime allowance which means there'd be no benefit from indexation after that. They've used all of it, so any growth in the drawdown fund, then triggers a lifetime allowance excess. If you look at the second lifetime allowance test, in this case, age 75, and they've then got £900,000 in their drawdown policy, then it's just a simple matter of deducting what they designated, originally, the £750,000. Then you have £150,000, which gives you a tax charge of 25% of that.

    Okay, so that's the summary of the events that trigger a lifetime allowance test, but they don't tell you what they the lifetime allowance is. They just apply whether you have the standard lifetime allowance or a higher protected lifetime allowance. So we'll just look at some of the lifetime allowance protection options now and we'll start with the primary and enhanced protection before moving on to the more recent options.

    So Primary Protection worked by granting you a personalised lifetime allowance based on your benefits at A-day and it worked by granting you a Primary Protection factor. So the lifetime allowance at A-day was £1.5 million, so if you had £3 million in your fund at the A-day, you had a Primary Protection factor of 1.0 which meant you had the standard lifetime allowance, plus 100% extra of that standard lifetime allowance as well. So, in this case, the lifetime allowance would have been £3 million for that client.

    And the intention was that the Primary Protection factor grew with the increase in the lifetime allowance and that worked up until the point when the lifetime allowance reached £1.8 million. That didn't work so well after that. So what happens to these members is that they have an underpinned lifetime allowance of £1.8 million and it's held at that level.

    Tax-free cash can also be protected under Primary Protection. You had to have more than £375,000 tax-free cash at A-day and what happened was your tax-free cash amount was then revalued in line with increases to the lifetime allowance, again, using that underpinned £1.8 million. So the lifetime allowance was £1.5 million and then that increased to £1.8 million, so a 20% uplift in your tax-free cash. That basically means for Primary Protection members, everything is just uplifted at 20%.

    Enhanced protection, under that option, there is no lifetime allowance test. But the lifetime allowance can restrict your tax-free cash. Otherwise, there are no lifetime allowance tests, and you pay for that by not being to contribute or being able to have only limited accrual. So in that sense, it's quite similar to Fixed Protection, but there are some technical differences. Fixed Protection works by looking at your increase in benefits, as you pay into your fund, so it's an input test whereas enhanced protection it's an output test. So you look at the value when you take your benefits and then you work it back to see if there's been any accrual, and only then can you determine if you've retained protection or not.

    Similarly, with tax-free cash protection, if you had more than £375,000 at A-day, then you can have a tax-free cash protection with enhanced. That lump sum percentage is maintained, so whatever that would be, say 20% or 30%, and that percentage should be stated on the certificate, and then you can take that amount from every fund.

    So that leaves those members with Primary or Enhanced who didn't have tax-free cash protections because they had no more than £375,000 cash at A-day. Even though they have Primary or Enhanced, they don't get tax-free cash protection, so just the standard rules apply. So 25% of your benefits or 25% of the lifetime allowance, but there was a recent change which gave those members a notional £1.5 million lifetime allowance. The standard rules apply, but it's based on a higher notional lifetime allowance of £1.5 million.

    Chris is now going to look at the more recent options, Fixed Individual Protection.

    Chris Jones: Thanks, Tom. So each time the lifetime allowance has reduced, there's been another round of protection. With Fixed Protection at £1.8, originally, and Fixed Protection '14 and Individual Protection '14 protecting up to £1.5, and now the ones that are still available, Fixed Protection '16 and Individual Protection '16, which can protect up to £1.25 million. There's no application deadline for either of these and both must be applied for online.

    On the left, Fixed Protection: the only requirement is that you have no contributions, no new arrangements or benefits accrual since 6th April 2016. If that applies, you can apply for that and protect up to £1.25 million. That amount is fixed, as in the name, there's no reevaluation with inflation. Individual Protection allows you to accrue benefits and make further contributions. It is particularly attractive for those in defined benefits schemes.

    In order to apply for it, you needed to have at least £1 million as of the 5th of April 2016. You'll see the higher your value is, the more value that Individual Protection is. For those with less than £1 million at 6 April, then the only option would have been Fixed Protection, but it'll be too late for any who've contributed post 5 April.

    Those with greater than £1.25 million, in most cases, Individual Protection is better. It protects that same amount as Fixed Protection, and allows that option of further contributions.

    A difficult decision is for those between £1 million and £1.25 million. But, clearly, the closer the value is to £1.25 million, the more benefit Individual Protection 2016 provides the clients. In this situation need to consider whether the value ofany contributions paid subject to the lifetime allowance charge will outweigh any extra protection available from Fixed Protection 2016.

    While there's no deadline for applications for either form of protection, the statutory obligation for the scheme to provide members with valuations, as of 5th April, only applies until 2020. Therefore, this may mean that anyone waiting longer than that could have difficulties applying for Individual Protection, particularly in a DB scheme, so that may be very difficult to get a valuation after that date. So it's best to get on with it and apply for anyone who is able to.

    There are two key changes announced in the Pensions Freedom and Choice legislation, so that opens up pensions, an attractive IHT planning option for many clients. The first is a reduction in taxation of benefits, particularly for those in drawdown. The second was the ability to nominate anyone to receive beneficiaries drawdown and, in turn, the ability for them to pass on further down the generations.

    The only issue now is the differentiation where the member died pre-75 or post-75. Pre-75, all benefits are free of tax whether you pay that as a lump sum, dependent annuity or beneficiary drawdown. Post-75, that will be taxed at the beneficiary's marginal rate of tax. They've still got the lifetime allowance charge. There's a new benefit crystallisation event, introduced to test any uncrystallised funds moved into drawdown before 75 which we tax at 25%. The lump sum is taxed at 55%.

    Pre-75, the option to take a lump sum with the excess tax at 55%, but beneficiary drawdown is a far more tax-efficient option, 25% taken from the fund, and then all of the fund after that can be drawn free of tax, immediately, if you wanted to. That's far better than taking a lump sum taxed at 55%. So it's important to check if the option is available with your provider.

    And if you don't want or need funds in excess of the lifetime allowance, it may be better to take the 25% lifetime allowance charge, and leave the funds outside of the estate. It may be practical to pay a higher rate of income tax on the income, and then 40% IHT on any funds that remain in the estate. Post-75, the beneficiary will pay income tax when it is withdrawn. That has to considered, but may still be practical. Now I'm going to pass back to Tom, so he can look at some other planning points.

    Tom Coughlan: Thank you, Chris. I'm just going to look at a few options for lifetime allowance planning, and this is based very much on some of the questions that we do get on the help desk. The first thing to say is that whilst it's usually possible to mitigate the lifetime allowance charge, if your fund is approaching or above the lifetime allowance, it's very difficult to avoid. But there are ways that you can minimise the overall charge and so on.

    Like I say, this is just based on some of the questions that we get, just a few discussion points perhaps. The most common approach is just to reduce funding at the point that you're anticipated growth will take your fund up to the lifetime allowance. So there will be some assumptions needed there, particularly around the client's attitude to risk during retirement.

    Another assumption that should be included is CPI indexation of the lifetime allowance. That will apply from April next year. We're currently at 2.6%. Whatever that is, that will cover at least some growth. It does leave open the option of deferring benefits, if your growth is within the lifetime allowance.

    From that point, once you've worked out where that point is, then do you carry on investing, and then just suffer the lifetime allowance charge or do you invest elsewhere outside of the pension environment?

    Another aspect of this is employer funding. If the employer is paying all the contributions or funding all of the accrual, then accruing above the lifetime allowance may simply be the best option or the only option. As we always say: something subject to tax is better than nothing. Another approach, just simply delay the lifetime allowance charge by deferring until age 75, and that's particularly important for those with an IHT issue who want to pass on their fund to their beneficiaries.

    As I mentioned in point one, CPI will cover at least some of your growth within the funds and may make leaving the fund unvested for as long as possible, a more appealing option. And, of course, lifetime allowance rules may change in the future or be scrapped. The Centre for Policy Studies who are quite an influential think tank have called on a number of occasions for it to be taken away and, instead, the focus be on what you pay in. So as the annual allowance reduces that, perhaps, makes the scrapping of the lifetime allowance more likely. But that is obviously very speculative and it's very difficult to make decisions based on that.

    Another route would be simply to purchase the annuity or take your scheme pension just before the lifetime allowance is reached, but being careful not let the tax influence the decisions too much, as there may be other different consequences elsewhere.

    And if you're using that approach with a drawdown, then just being aware of the second lifetime allowance test. However, careful use of withdrawals can help you mitigate any lifetime allowance charge, and that's we'll look at now on the final slide.

    This is, hopefully perhaps, quite a common scenario at the moment. So the client, age 60, has a DC fund worth £900,000, so currently 10% of the lifetime allowance remaining.

    They have no plans to retire immediately, but they do have some scope to receive pension income, and this is based on a standard lifetime allowance of £1 million and an assumed growth rate of 4%, and CPI of 2%. So just looking at what options are available to this client. So option one, leave the fund until age 75. The fund will catch up with the LTA between the ages of 65 and 66, and then projecting forward to age 75, they will have an excess of £275,000. So that would give you a charge based on the 25% rate, of just short of £70,000.

    The second option would be to vest as soon as you reach the lifetime allowance. As I said, that would be reached in about five or six years’ time. So there's no lifetime allowance charge at that time, but projecting forward, there would then be a lifetime allowance excess of £385,000, giving you a lifetime allowance charge of just over £96,000.

    And the reason option two is worse in this scenario is because there's no indexation of the amount designated to drawdown, any growth creates a lifetime allowance test. So that pushes your growth over into the second lifetime allowance test whereas under one, at least 2% of your growth is covered by CPI. So this introduction of CPI can distort some of these projections.

    Initially, when I ran these examples I expected two to come out better, but one is the better option based very much on those assumptions. Hopefully, this just highlights that it can be very complicated; there's no black and white answer to any of these questions.

    But in this example, option three, comes out better. Very similar to option two: you crystallise the fund when it reaches the lifetime allowance, and what you then you do is from the drawdown, you take regular income every year. In this case, an income of £32,000 would be required to keep the drawdown growth within that 10% of the lifetime allowance that is remaining, but always being careful to make sure that you don't simply replace the lifetime allowance tax charge with an income tax charge on the drawdown that you receive. So there's many factors to consider in all these examples and lifetime allowance is just one of those factors.

    I'm going to hand you over to Sandra now who's going to take you through some of the resources that we have available on our website.

    Sandra: Thank you, Tom. You can find more information on the Scottish Widow's website at www.scotttishwidows.co.uk/extranet, including our April TechTalk editions which are under Financial Planning and then TechTalk. Our DB special edition includes articles on DB transfers and the lifetime allowance, and our Budget special edition includes frequently asked questions on pensions including the lifetime allowance, and you can use our index of articles on that page to find a range of support material on any topic.

    You can also find a range of pension support material under Financial Planning and then Pension Planning, including many articles on the lifetime allowance and lifetime allowance protection. We also have a range of tools and calculators, under Financial Planning, then Planning Tools, Tool and Calculators. We have a carry forward calculator, including the tapered annual allowance, a salary / dividend / pensions calculator, a tapered annual allowance income calculator, a tax-relief calculator and a lifetime allowance calculator, as well.

    And you can view all of our previous MasterClasses under Financial Planning, and then TechTalk MasterClass Series. A recording of this MasterClass will also be added to that page shortly, and a certificate of attendance will be emailed out to everyone attending this live event. I hope you found all of that useful. I'll now hand it back to Suzanne to remind you how to ask any questions you might have.

     Operator: Ladies and gentlemen, you may submit your questions via the web tool. Please, type your question into the Q&A box and select ask.

    Chris Jones: Okay, first we've got - while we're waiting for more to come through, I've got a few requests, lots of people are asking for copies of the slides. So the slides will pasted up on the website with a copy of the recording and the transcript next week, on that same page link that Sandra showed you here.

    So I have one question here that covers out everything. So someone, a common situation, £1 million transferred from a DB scheme into a DC SIP. They want to wait a little while for it to grow before taking their benefits. So for example, it's got no protection. It grows to £1.1m. What is their position then? So the first point is the £1 million lifetime allowance, there's no tax charge and no benefit crystallisation until he takes benefits or 75, if earlier. So he could take just £1 million and there'd be no charge until age 75. And to take the full £1.1 million, that would be £250,000 tax-free cash and the rest is into drawdown, for example. The £100,000 excess will be subject to a 25% charge and then that excess of £75,000 would move into drawdown.

    One for Tom here, on the second lifetime allowance test, I think it's just a confirming question. If they draw income at age 75, the amount is below the amount they put in, there'd be no tax charge?

    Tom Coughlan: Yeah, absolutely. But the important thing is that you are deducting the amount that was designated to drawdown. So I think on the question it says, an individual has £1 million, now they vest and then a million on the second lifetime allowance test, you have to remember that the tax-free cash was taken originally. So the amount designated to drawdown wouldn't have been a million, it would have around about £750,000. So as long as there's no growth on that £750,000, say if that was designated to drawdown, then there'll be no second lifetime allowance test. It's just important just to make sure you factor in that tax-free cash, and not use that as your baseline figure.

    Chris Jones: Someone's asking that applying for a current round of protection. Yeah, it's online only applications, so we can't actually see past the front screen because unless you apply, you can't get any further, but you've got to have your own government gateway. So you could obviously assist a client to do it, but they have to technically make that declaration and apply for it themselves.

    Tom Coughlan: Yeah, there's another question about the case study. So, 'What about taking the tax-free cash at age 60?' So, yeah, that would have been another option. But without actually running the example, it's difficult to say. So what I can do is, I can email you directly just to see how that compares to the other three options.

    Chris Jones: There's one about the rules around amalgamating existing capped drawdown plans into one new drawdown plan. As you said, you know it can't be done, but you don't know the reasons behind it, yet. So I don't think there's a particularly great deal of logic for it now with flexi-access drawdown, but just the rules were not changed. So the drawdown has to be put into a separate arrangement, and I suppose the second lifetime allowance test is one of those reasons to make sure you can keep these funds separate, so you don't offset a loss with a gain, in effect.

    Tom Coughlan: Yeah, another question on the second lifetime allowance test. So, 'Does death trigger a second lifetime allowance test?' It's only annuity purchase or reaching age 75 that triggers that second test. So a member that dies with a drawdown fund, there is no second lifetime allowance test on that.

    There is a question about the order of benefit crystallisation events, as well. If you take one fund, then the tax-free cash is always tested first, and the rest of the fund is tested after that. If you crystallise at the exact same time two separate schemes, then the member chooses the order, so which crystallises first, they can choose which to test against the LTA first. If you're talking about death benefits, then they're all deemed to occur simultaneously. But we do have a number of articles on the website explaining that, which Sandra highlighted a moment ago.

    Chris Jones: I think someone's just checking what, at age 75, what lifetime allowance to use and it will always be the lifetime allowance that is in place at the time that benefit crystallisation event occurred. So when that reaches 75, whatever the lifetime allowance is, that's what you would use. You wouldn't use the one when you first put the money into account.

    Tom Coughlan: There is one question about age 75, 'Will the cap at age 75 change given increased life expectancy?' This has been suggested as a possibility on a number of occasions, but it seems a very difficult thing to get round. So, you know, I can't say for sure, but I think it's unlikely that age 75 cap is going to change in the near future.

    Chris Jones: Yeah, so, we'll take the last one. There are a few more and we'll get back to you, individually. So a client with a DB scheme valued £1.4 million and they're currently paying into a further plan, is any protection available? Yeah, so, it would depend on what that value was at 5 April. So if that value of those benefits is greater than £1 million and if it's DB and it stays in DB, it's likely that they will be to at least get a valuation from the scheme as of 5 April, so long as it stays at £1 million, they can apply for Individual Protection 2016.

    Simon Harris: Okay. Thank you, everybody for all those questions, and thanks to Tom and Chris for the presentation, indeed, answering those questions. As Chris was saying, any questions we didn't have time to get to this morning, we'll respond to you separately on those points. As highlighted in my introduction, more individuals are likely to be subject to a lifetime allowance charge as the limit reduces and, therefore, revenues from this charge are likely to increase. There are calls for its removal, however, that is not looking likely right now.

    As we've seen, it can be a complex area, but hopefully armed with the detail and information from the presentation today, you'll be in a stronger position to support your clients, utilising their pension planning in the most efficient manner. Please, make use of the material available from the Financial Planning team which Sandra highlighted and speak to your Scottish Widows contact about how our proposition can help you with the planning ideas Tom covered today, managing the transition into retirement, potentially controlling any lifetime allowance impact.

    And as a reminder, a recording of today's session will be placed on the advisor extranet for further review and, indeed, if you wish to review any of the other recordings from previous Masterclasses, and CPD certificates will be issued. My thanks again to Chris, Tom and Sandra for taking us through the slides, and highlighting the additional material available to you. That concludes today's presentation, and I thank you very much for joining.

    Operator: Thank you. Ladies and gentlemen, that will conclude the Scottish Widows Lifetime Allowance MasterClass Conference Call. Thank you for your participation. You may now disconnect.

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