AFPS (Lifetime Allowance).
With the caveat that your question is "minimise tax bill" and not "maximise net benefits" (which requires a much deeper analysis!), I offer the following:
1) ET one day before your end of service date and elect to take AFPS15 from the earliest possible date, meaning that as much of your benefit as possible is taken as an AFPS15 EDP. Neither the lump sum nor the ongoing payment is classed as a pension and therefore neither is assessed against the LTA. You will still be subject to a benefit crystallisation event at state pension age when your deferred AFPS15 pension kicks in, and there is a risk that its CPI indexing will have outstripped any increase in the remaining portion of your LTA, but at least it kicks the tax bill down the road. Conversely if you serve to your end of service date and/or elect to take as much AFPS75 as possible, all of your benefits will be classed as a pension and therefore assessed immediately against LTA on retirement.
2) Get divorced pronto and transfer some of your pension pot to the ex under a pension sharing order before the LTA assessment is made. Hope that the tax man doesn't ask questions if you reconcile and remarry a few years later...
1) ET one day before your end of service date and elect to take AFPS15 from the earliest possible date, meaning that as much of your benefit as possible is taken as an AFPS15 EDP. Neither the lump sum nor the ongoing payment is classed as a pension and therefore neither is assessed against the LTA. You will still be subject to a benefit crystallisation event at state pension age when your deferred AFPS15 pension kicks in, and there is a risk that its CPI indexing will have outstripped any increase in the remaining portion of your LTA, but at least it kicks the tax bill down the road. Conversely if you serve to your end of service date and/or elect to take as much AFPS75 as possible, all of your benefits will be classed as a pension and therefore assessed immediately against LTA on retirement.
2) Get divorced pronto and transfer some of your pension pot to the ex under a pension sharing order before the LTA assessment is made. Hope that the tax man doesn't ask questions if you reconcile and remarry a few years later...
Hi Easy Street. Is the bit about the EDP lump sums correct? I understand that the lump sums given on exit and at age 65 for AFPS 05 are based on an 'abated pension', so the word pension struck me as it gets added to the LTA?
A nuance in RP's situation I missed is the AFPS05 element, so the McCloud remedy choice is between 05 and 15, both of which offer EDPs. However as RP is aged over 55, it is still better to choose AFPS15 if the goal is to minimise the immediate LTA tax bill, as the AFPS05 element is considered a pension if exiting service after age 55.
To develop my earlier theme (thank you GreenXCode for the kind words!), another way of minimising the LTA tax bill is to take whichever decisions result in you getting a smaller pension...
