Legal & General Share Discussion Threads

[mister md] 27/5/2021 12:48

marktime1231 - lol ! Similar here, very chunky dividend received today. And glad I added more to holding during last year whilst some on here were sceptical - capital growth and still a high dividend yield, a very compelling combination.

[thamestrader] 27/5/2021 11:48

Don't blow it all in the pub at once (unless, of course, you want to).

[marktime1231] 27/5/2021 11:43

Checking to see why my portfolio stepped up strongly this morning, no real news and the markets flat. I had temporarily forgotten today was LGEN dividend day!!! Terrific, like a heavy payday envelope hitting the workbench ahead of a long weekend back in the day when real workers got paid in cash. Right, off out, I will be the guy whistling cheerfully.

[thamestrader] 20/5/2021 09:37

We're not the only ones, all my 'insurers' are languishing.

[adejuk] 20/5/2021 09:30

why are we languishing?

[kirkie001] 16/5/2021 16:01

Good shout, William. You're right about them being long longevity - and they're also a reinsurance counterparty for some of the big bulk annuity writers (like L&G).

[williamcooper104] 16/5/2021 13:26

Reinsurance Group: Our Largest Position https://seekingalpha.com/article/4429113-reinsurance-group-our-largest-portfolio-positionThis is interesting - a pure play life/medical health care re-insurer - it's not super cheap but seems to be well run with a good dividend growth history They are very long longevity and thus ought to be a hedge on the longevity risk of annuity providers (DYOR of course)

[pierre oreilly] 16/5/2021 09:06

I'm sure someone said last week that pensions were easy to understand!Like the IBM operating system, pensions are now more than one brainful of information, i.e. no one person fully understands them probably. Mainly I expect because various rules contradict each other, leading to clarification in the courts occasionally.What an expensive mess. But really they are designed that way Imv.

[ianguerin] 15/5/2021 16:06

Marktime - I think you misunderstood my last post. I didn't say anything about a £145,945 UFPLS; I gave an example of a £30,000 deferred defined benefit pension, where the member has the option to take a lump sum of £145,945 & a reduced pension of £21,891 at age 60.

[cassini] 14/5/2021 13:55

If you time things right of course around the start of the new tax year you can dump £40k into an ISA within a single week.

Well, that's if one doesn't have so much money coming in from work that the annual ISA allowance gets snapped up anyway, a problem I never suffered from ;0)

[marktime1231] 14/5/2021 13:35

Are you finished with working so that you no longer enjoy higher rate tax relief on your workplace pension scheme contributions? Or can you opt out?

Is your DB scheme manager happy for you to take a partial lump sum without crystallising the rest? There will be scheme rules and the discretion of the manager to contend with.

Taking an UFPLS of £145,945 gives you a tax free lump sum of £36,486.25 and the rest £109,458.75 will be taxed at your marginal income tax rate ... you will pay a minimum of £33,770 in immediate tax, more if you have other current year earnings. Your move nets you £112,175 or less. And puts any further earnings this year at risk of add rate tax, the nightmare of taper and sliding scale calculations etc

If your (former) employer is happy with this procedure and you are happy making that sort of contribution to the taxman than all good.

The UFPLS event also restricts all future pension contributions to the gross £4,000 pa MPAA, whether to your own scheme or to stakeholder pensions.

Where will you use the proceeds, you can't quickly recycle it into a SIPP or an ISA because of the annual allowances. You can pay off the mortgage or buy the car you always wanted, but if you invest it any income or gain in the tax year will have you flirting with add rate tax etc

So once again ianguerin thank you for your clearer understanding of the rules around using your various pension pots. But with the greatest respect for your clarity I will take issue with your observation "it's relatively simple".

As John Wayne might have said, the hell it is!

[imastu pidgitaswell] 14/5/2021 07:59

Good thoughts - and thanks again for those links. Read them while watching United fail to play Liverpool last night; probably better done with a cold towel, but it looks like what I needed. Very grateful.

[ianguerin] 14/5/2021 07:50

For those with defined contribution (money purchase) pensions alongside a defined benefit (final or end-of-career average salary) pension, I think it's relatively simple - take the deferred defined benefit pension at the first available opportunity.

Say your DB pension at 60 is £30,000. If the pension fund applies late retirement factors, that may increase to say £37,000 at age 65. If you wait until 65 before taking the pension, you have foregone £150,000 in pension income & it may take 20+ years to claw that back that shortfall. Assuming no lump sum taken, taking the £30,000 utilises £600,000 (56%) of the current LTA.

Taking a lump sum of £145,945 might reduce the pension from £30,000 to £21,891, depending upon the factors which the pension fund applies at age 60. LTA utilisation is now (£21,891 x 20)= £437,838, + lump sum of £145,945 = £583,783, which is 54.4% of the LTA.

Whichever option is taken, the unused percentage of the LTA is available when the next pension is crystallised. So the not-yet-taken defined contribution pension might be expected to grow in value, & if it is used to purchase an annuity, that will be at a later age & consequently generate a higher annuity income. Or transfer the defined contribution pension into drawdown, or a mix of the pension freedom options which are available.

DYOR

[marktime1231] 13/5/2021 13:08

Well thanks again to ianguerin and others, it seems I was mistaken about when the MPAA kicks in so I have learned something and have edited my previous post. I thought it was when you first crystallised a pension and took proceeds from it, but the actual trigger is when first drawing down taxable income beyond the 25% tax free lump sum, an interesting distinction and sorry to everyone for my confusion.

Thanks for those links. More learning and less knowing ahead.

The difference between extracting uncrystallised funds pension lump sums (UFPLS) from a pot versus drawdown eg crystallisation to take a 25% tax free lump sum is important. It is the UFPLS which immediately triggers MPAA. Of the UFPLS amount 25% is tax free and the rest is income taxed at your marginal rate.

Instead of potentially causing a breach of the LTA an UFPLS reduces the remaining LTA available to you by the amount you have taken out. You don't breach the LTA until you have extracted aggregate lump sums beyond the LTA amount, or until you crystallise the value and draw from a pension which is bigger than the remaining LTA. I think you can only do UFPLS on a pot eg a money purchase scheme. Things depend on whether you are 75. How things work if you have a mix of money purchase and workplace schemes, and how you can juggle them to defer or defray the consequences of having pension savings in breach of the LTA is ... er ... complicated!

If you have pension savings near the LTA congratulations and as the man says maybe it would be worth taking professional advice.

[starpukka] 13/5/2021 11:02

#LGEN back around recent support levels for anyone looking @ share price aswell as income. Market downday of course. But could be a nice little rise from here.

[williamcooper104] 13/5/2021 09:48

Just leave it as is - yesterday was a better day :)

[fletcher270] 13/5/2021 09:04

Problem with AJBell website it's showing free at over 7000 and my portfolio same as yesterday

[rik shaw] 13/5/2021 08:17

I am in a similar position with a DC fund which I am drawing and a deferred defined benefit pension to come. The process is as set out in a useful Telegraph article on 23/3/21:


'Each time you take benefits, the amount you crystallise will be tested against your available LTA and your pension provider will give you a statement showing the percentage of LTA used up.

Once you’ve used up 100pc of your LTA, any excess benefits you take triggers a tax charge. ...'

I have taken only a small percentage of my LTA so far, I therefore have no imminent threat of a potential tax charge on excess amount above LTA

[imastu pidgitaswell] 13/5/2021 07:49

Many thanks for those links - I will check out in due course.

Take your point on IFAs, but I am a chartered accountant, I do understand the considerations - it's just that I can't find absolute clarity on this issue of mixed DB and DC pensions and benefits crystallisation impact on the LTA.

I certainly don't need the sort of formal advice on 'how' to invest/manage risk/pay lucrative annual fees, nor on transferring/no transferring pensions from DB to DC - I just want clarity on the rules on crystallisation of the LTA in my circumstances. I really don't think I should have to pay for the rules to be explained.

Hopefully it's in those links - will review offline later. Many thanks again.

[ianguerin] 13/5/2021 07:09

Williamcooper/Marktime - If you have only taken a lump sum from your SIPP & have not taken any income from it, the MPAA doesn't apply - see pages 6 & 8

hxxps://www.youinvest.co.uk/sites/default/files/guide/file/AJBYI_Guide_Drawdown.pdf

If that link doesn't work - it's "A guide to drawdown" on the A J Bell website)

I suggest a number of the readers who have followed this off-topic should be talking to a good IFA. Their fees may not be cheap, but research suggests you might gain in the long run. BTW - I'm not an IFA, so I have no vested interest in making that suggestion

DYOR

[ianguerin] 13/5/2021 06:20

Links to phasing LTA utilisation via multiple drawdowns


hxxps://www.thepfs.org/news-insight/news/articles/drawdown-planning-and-the-lifetime-allowance-tests/94262

hxxps://www.pfp.thepfs.org/2020/09/22/crystal-clear

hxxps://www.tilney.co.uk/news/what-are-benefit-crystallisation-events

[sd235] 13/5/2021 00:22

As an aside for those looking for a good dividend and not to worried about share price growth, Henderson far East income is worth looking at. Its still offering a 7.1% dividend. If it was a UK investment trust with that dividend then you would expect significant negative share price over 5 years (my preferred reference) probably around 25% plus. Also a big discount to NAV.
Henderson far East trades at a small premium and has a positive share price gain of 16% over 5 years. I would have bought more of these during the crash but I want a minimumal amount in China. It has 23% in China so not going to put anymore in.
I have a 8% dividend and about the same share price gain over 14 months.

[imastu pidgitaswell] 12/5/2021 20:38

I understand but to be honest I’m not looking for financial advice (and the corresponding fees) - I’m looking for an explanation and understanding of the bloody rules. Which government should supply clearly and simply.

Frankly it shouldn’t be that complicated and if various intelligent people here don’t understand the answers then the rules must surely be wrong.

Oh well, another couple of years to worry about it, rather than maybe resolve it. 😳

[panshanger1] 12/5/2021 17:55

Imastu I had a fairly small company pension scheme ( money purchase ) and a much larger defined benefit scheme I took and crystallised the former but did not touch the DB scheme I had fixed protection on the LTA I supplied the certificate and the LTA was reduced by the amount crystallised Both pensions were not tested at that time