The Pension Lifetime Allowance

I have been having a number of conversations recently with clients around the pensions Lifetime Allowance (LTA). This is the amount of pension benefits an individual can accrue over their lifetime without incurring a Lifetime Allowance Charge.

The Lifetime Allowance for 2022/23 is £1,073,100 and this figure will be frozen until 2025/26 which means that more and more people will be affected by the Lifetime Allowance. According to HMRC, around £382m was paid in Lifetime Allowance Charge in 2020/21 which was an increase of 11% from the previous year.

I have been saying for a number of years now that the Lifetime Allowance should be scrapped – there is a limit on how much can be paid into pensions so why penalise people for making adequate pension provision and for good investment performance?

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If you are worried about the Lifetime Allowance or want to discuss your pension options, feel free to get in touch.