The standard lifetime allowance for a pension fund for 2015-16 is £1.25 million. This will fall to £1 million from 6 April 2016 and will become index linked from 2018.
In deciding whether you are nearing the lifetime limits you need to consider the value of all your private and work pensions. If you exceed the lifetime limit you can:
- Take the excess as a lump sum before 75, less a 55% lifetime allowance charge
- Retain the excess in the pension fund, before or after 75, less a 25% lifetime charge.
If you think you might be affected by the lower allowance you can apply to protect yourself against the potential lifetime allowance charge. This would have the effect of fixing your allowance at a value of up to £1.25 million. It is therefore important that, should you think that you may be affected by these limits, you seek independent financial advice as soon as possible.
For further information contact Green & Co.
Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.
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