Pension Lifetime Allowance reduced from 2012
However there is a sting in the tail. The Lifetime Allowance, which is the maximum an individual can accrue in pension funds over their lifetime is to be reduced from £1.8m to £1.5m from 2012.
Careful targeted funding will therefore be necessary if a tax charge of 55% on excessive funds in the future is to be prevented.
We are examining the Treasury proposals as they have indicated that they intend to design a protection regime that supports those individuals who have already made pension saving decisions based on the current level of the LTA.
What do you need to do?
Nothing – yet! We will review the positions of all clients who are still pension funding and those who have not yet accessed retirement benefits. Where appropriate we will advise upon reduced or increased funding; early access to avoid the lifetime allowance charge; and opting out of scheme membership where appropriate. We await further announcements about changes that affect those already in receipt of unsecured pensions (income drawdown). We may see changes post age 75 and changes to the tax rate applied to lump sums on death prior to that age (55% seems a popular number).
We will keep you fully informed, but please do not hesitate to contact either Moira or Bernice if you have immediate queries or concerns.