EPN705 - Lifetime Allowance (LTA) letters and one-to-one pension support for members
EPN705 - Lifetime Allowance (LTA) letters and one-to-one pension support for members
Audience
This notice will be of interest to:
HR managers
Pension leads
Actions
To note the changes to LTA from April 2024.
To note when we will be issuing LTA letters to members who have breached the LTA or are close to breaching.
To note when the Scheme Administrator (MyCSP) will provide you with Management Information (MI) to identify which of your employees will receive an LTA letter.
To note how employers can support members who have received an LTA letter.
To note that one-to-one pension tax sessions can be provided by the Scheme Administrator on request, and how these can be arranged.
To note other support available to members who receive an LTA letter.
Timing
Immediate
Detail
LTA is the limit on the amount of pension benefits an individual can take from all their registered pension arrangements before they incur a tax charge. If a member exceeds their LTA, they will incur a tax charge when they take their benefits at retirement. Find out more about LTA.
On 6 April 2023, the Government suspended tax charges for breaching the LTA and announced the abolishment of LTA from 6 April 2024. For more information about this, see point 15 below. To find out more about LTA, please visit the Lifetime Allowance (LTA) page at www.civilservicepensionscheme.org.uk
We will issue LTA letters to all affected members by 01 March 2024.
These are members whose estimated Civil Service pension benefits exceeded 90% of the LTA on 31 March 2023 excluding contributions to the Civil Service Additional Voluntary Contributions (CSAVC) scheme. Members who receive a letter will need to consider their position regarding their LTA and to seek further advice.
The Scheme Administrator will send members’ LTA letters directly to home addresses. For security reasons some letters will be emailed to employers to pass on to members.
Annex A of this EPN contains a sample copy of the LTA letter for information. The Scheme Administrator will provide your organisation’s pension lead with Management Information (MI) by 04 March 2024 to identify which of your employees will receive an LTA letter.
Some members may need to request the value of their benefits to help them understand their protection options. Valuations can be obtained by contacting the Scheme Administrator using the Contact Us form on the Civil Service Pensions website.
If members need to request the value of their Civil Service pension benefits to support them in understanding their protection options, they must approach the Scheme Administrator directly by emailing contactcentre@mycsp.co.uk.
Please note, the Scheme Administrator cannot discuss a member’s tax information with you without the member’s permission.
Pension tax sessions for members
The Scheme Administrator can provide one-to-one pension tax awareness sessions to members who receive an LTA letter. However, you can source your own provider should you prefer to do so. Tax support sessions can either be delivered via Microsoft Teams or telephone. For more information about the cost of tax sessions, and how to book, please refer to Annex B or contact TaxSupport@mycsp.co.uk.
If you decide to provide a tax support session for your members, they should have a copy of their ABS with them during the session.
Support for members who have questions about LTA
Members who have queries about LTA should be signposted to the dedicated Lifetime Allowance web page for more information. If a member has an unresolved query after visiting the website, they should contact the Scheme Administrator using the Contact Us form on the scheme website.
Neither the Scheme Manager (Cabinet Office) nor the Scheme Administrator can respond to individual tax queries. Queries must be directed to either His Majesty’s Revenue & Customs (HMRC) or a registered financial adviser.
From the 6 April 2024 the LTA will be abolished and replaced by two new allowances: Lump Sum and Death Benefit Allowance (LSDBA) Lump Sum Allowance (LSA)
The Lump Sum Allowance (LSA) will limit the amount of money that can be taken from a pension as a tax-free lump sum to £268,275 (25% of the Lifetime Allowance set at £1,073,100 before 6 April 2024).
The Lump Sum and Death Benefit Allowance (LSDBA) is a limit on the amount of tax-free money paid out during a member’s lifetime or when they die. The standard LSDBA is £1,073,100.
Members with Lifetime Allowance protection will have their LSA and LSBDA based on the amount protected.
