Stand-out Q – LTA enhancement factor…

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FRI, 24 MAR 2017

Our Technical Hub provides access to a wide range of pension tax and trust technical resources. Every now and then we post tweets covering stand out questions from our technical content and our answers in case others might also find them helpful. As Twitter’s character restrictions only allow for the bare bones of the Q&A we link to the details here, too.

Question:

An individual has a lifetime allowance enhancement factor (LAEF) due to having transferred a recognised overseas pension (ROPS), the rights of which did not benefit from UK tax relief, to a registered pension scheme. They have never funded the registered pension scheme whilst UK resident, therefore its total value is as a result of the transfer from the ROPS, however, the individual has now divorced and the pension sharing order indicates the pension debit is to be for 40% of their pension rights. What impact will this have on their LAEF?

Answer:

The Pension Schemes Helpdesk confirmed that the LTA enhancement factor is not affected by the pension debit. The formula used at the time of the benefit crystallisation event (BCE) is determined by the date from which the LAEF applied. See pages 2 & 3 in this Tech Talk for some further detail.

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