The Government announced at Budget 2015 that it will reduce the Lifetime Allowance for pension savings from £1.25 million to £1 million from April 2016. From 2018-19, the Lifetime Allowance will be increased by inflation (the Consumer Prices Index).
The change could affect:
- Members of classic who have, or expect to have, an annual pension of £43,500. Members who earn £77,000 and above with 45 years service may be in this position, as well as higher earners with shorter service;
- Members of premium, nuvos and alpha who have, or expect to have, an annual pension of £50,000 (before lump sum commutation). Members who earn £66,000 with 45 years service, may be in this position, as well as higher earners with shorter service.
Any external pensions, or Added Pension / AVCs in the Civil Service Scheme, will also count within the Lifetime Allowance limit, so may cause members to exceed the Allowance, even if their Civil Service pension is within the £1m limit.
HM Treasury has produced a factsheet which provides more information about the changes, and the details of the protections that will be available from HMRC.
Please note that Civil Service Pensions cannot provide advice to members about their personal tax arrangements. The scheme can only confirm the value of your pension benefits. You might wish to talk to an Independent Financial Adviser about how the tax changes affect you.