DC savings scandal: Why the lifetime allowance has to go

It was acceptable in the 80s

clock • 3 min read

Mark Canning is really hoping the Chancellor bites the bullet and scraps the lifetime allowance in next week's Budget speech...

Cast your mind back to the late 1980s - Kylie and Jason were topping the charts, Scotland had a World Cup final appearance to look forward to and HM Revenue & Customs introduced the forerunner of the lifetime allowance (LTA) - the pensionable salary "earnings cap". The purpose of this was to restrict the maximum amount of pension someone could accrue without becoming "overfunded". The original "cap" was £60,000 for the 1989/90 tax year - thus giving a maximum pension of £40,000 (i.e. two-thirds of the cap). For members of occupational defined contribution (DC) schemes, this pension...

To continue reading this article...

Join Professional Adviser for free

  • Unlimited access to real-time news, industry insights and market intelligence
  • Stay ahead of the curve with spotlights on emerging trends and technologies
  • Receive breaking news stories straight to your inbox in the daily newsletters
  • Make smart business decisions with the latest developments in regulation, investing retirement and protection
  • Members-only access to the editor’s weekly Friday commentary
  • Be the first to hear about our events and awards programmes

Join

 

Already a Professional Adviser member?

Login

More on Pensions

TPO lays out three-year roadmap to tackle rising demand

TPO lays out three-year roadmap to tackle rising demand

The Pensions Ombudsman reveals plan to tackle challenge of demand outstripping capacity

Jonathan Stapleton
clock 31 July 2025 • 3 min read
Andrew Tully: The time is right for far-reaching state pension debate

Andrew Tully: The time is right for far-reaching state pension debate

Essential we get cross-party support to any changes, rather than get involved in any political ping-pong'

Andrew Tully
clock 21 July 2025 • 4 min read
Chancellor 'confident' govt will not need to mandate pension scheme investment

Chancellor 'confident' govt will not need to mandate pension scheme investment

Rachel Reeves confirmed in Mansion House speech pension funds and government ‘are united’

Holly Roach
clock 16 July 2025 • 2 min read