Pensions reform: Why there is a new de facto lifetime allowance

LTA amounted to a 'Sword of Damocles' hanging over savers

clock • 4 min read

Jon Greer looks at the abolition of the LTA, which he says was not the 'open season' for pensions as first reported due to the cap on tax-free cash swiftly put in its place...

The lifetime allowance (LTA) might have been scrapped, but a new de facto limit has taken its throne. Ditching the LTA is a seismic change to the pension landscape, but within minutes of the Budget documents coming out, it became clear that while the allowance was gone, a tax-free cash limit had been put in its place. Arguably not much has changed from a tax-free cash point of view, the limits on the amount of tax-free cash you can take in the 2022/23 and the 23/24 tax year are essentially the same. However, rather than limiting tax-free cash with reference to the LTA we now have an u...

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