Key points:
- Work out whether you are at risk of incurring a charge by adding up the value of all your pension pots
- Don't forget the test at 75
- What is the money for? If you are planning to pass it on, the LTA shouldn't be too much of a concern, if you are planning on spending it, it can be
Pensions are always in the firing line when it comes to tax grabs, with regular adjustments to the allowances, tapers and rates that control the exact amount of tax relief we all get. These include the lifetime allowance (LTA) – the amount you can build up in your pension pot over your lifetime before having to pay a penalty tax – which has been cut over the years from a high of £1.8m to just over £1.073m for the 2020-21 tax year.
Now Rishi Sunak has announced that the pensions lifetime allowance is to be frozen at £1.073m until 2026, exposing more savers to the charge for breaching the threshold.