What's the Lifetime Allowance?
Changes to tax allowances from 6 April 2024
The Government made some changes last year which will come into effect on 6 April 2024. We understand that these changes can seem complicated, but please note the vast majority of members will not be impacted by these changes or the limits. The changes concern the Lump Sum Allowance (LSA) and the Lump Sum and Death Benefit Allowance (LSDBA) that come into effect on 6 April 2024 under the Finance Act 2024.
These allowances replace the Lifetime Allowance (LTA) which was introduced in 2006 and put a limit on the amount of pension you could accrue before potential tax implications would arise.
From 6 April 2024 the maximum tax free cash available from all pension benefits is restricted to £268,275.00 (the LSA). The LSDBA will be set at £1,073,100, any benefits over this amount will be subject to a tax charge. These new allowances will be adjusted where individuals have one of the existing lifetime allowance protections.
If you have previously taken retirement benefits before 6 April 2024 or from another membership within the scheme or from a different scheme, these benefits will need to be taken into account when calculating your available LSA and LSDBA allowances.
Further information will be provided to you in any retirement illustrations you receive and upon request.