By TIM STALKARTT 14/02/2012
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On 6 April 2012 the Lifetime Allowance - the maximum value that you can accumulate within all your pensions before incurring tax - is changing.
What are the changes?
The Lifetime Allowance is currently £1.8million; from 6 April 2012 (the beginning of the 2012/13 tax year), the allowance falls to £1.5million.
If the value of all your pension schemes exceeds £1.5million after 6 April, the surplus will incur tax at 55% or 25%, depending on whether you draw the benefits as a lump sum or as income.
Will my pension savings be affected?
If you have pension savings of £1.5 - £1.8million, or you expect to exceed the new £1.5 million allowance by the time you draw pension benefits, you can seek protection by applying on HMRC’s website. The deadline for applying for ‘Fixed Protection’ is 5 April 2012.
How do I know if I have exceeded the Lifetime Allowance?
You can find out the level of pension savings you have accrued by logging into your account, or calling us on 020 7189 9999.
What are the next steps?
If you make any further contributions after 6 April 2012, you will lose Fixed Protection and your lifetime allowance will revert to £1.5million. Please call to speak to our advisers on 020 7189 9999.