Stand-out Q – pension earmarking order…

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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 an earmarking order for 40% of their pension rights, and now wishes to take their benefits from the money purchase arrangement. What amount crystallised is tested against their lifetime allowance (LTA)?

Answer:

The full amount crystallised is tested against the member’s LTA. The earmarking takes effect when the member takes their benefits, and income is taxed in hands of the member.

Earmarking ceases on the ex-spouse remarrying or on death of ex-spouse (unless a lump sum death benefit has been earmarked for the ex-spouse).

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