Lifetime Allowance

What is Lifetime Allowance?

Changes To Annual Allowance Page V1Lifetime Allowance is the limit on the amount of
pension benefit(s) that you can take from all of your registered pension arrangements before you incur a tax charge.

These benefits include:

  • lump sums; and
  • retirement income.

The current standard Lifetime Allowance is £1 million.

When you take your retirement benefits, we will calculate the total value for current standard Lifetime Allowance purposes in the following way:

  • multiply your annual pension payment by 20; and
  • add any automatic lump sum entitlement (classic/ classic plus only).

Based on the current standard Lifetime Allowance of £1m, members whose benefits exceed the amounts listed below, may incur a higher tax bill:

Scheme

Benefits  

classic

Pension of £43,480 per year plus automatic lump sum

premium, nuvos, alpha

£50,000 per year (automatic lump sum not applicable)

classic plus

Between £43,480 and £50,000 per year plus any automatic lump sum

For information

HM Revenue and Customs reduced the current standard Lifetime Allowance from £1.25m to £1m with effect from 6 April 2016. There are two types of protection available for individuals whose total pension benefits were in excess of £1.25m at 5 April 2016. These are: 

  • Fixed Protection 2016; and
  • Individual Protection 2016.

Further information on the available protections can be found on the gov.uk website using this link.