The short version: The Pension Lifetime Allowance used to cap how much you could build up in pension savings tax efficiently. Go over it and you faced a hefty charge. But good news: it’s been abolished.
What happened?
From April 2024, the lifetime allowance is gone. You can now build up pension savings without worrying about this particular limit. The annual allowance still applies, but the overall cap has been removed.
Why did it exist?
The government wanted to limit how much tax relief high earners could benefit from. But it created complexity and caught some people who’d simply been saving diligently for decades.
Does this change anything else?
The rules around taking benefits from your pension haven’t fundamentally changed. You can still take 25% tax free (up to certain limits) and the rest is taxed as income.
Should you save more now?
If you were holding back because of the lifetime allowance, you might want to review your pension strategy. The annual allowance is still the main constraint on how much you can contribute each year.
Want to maximise your pension savings? Let’s talk about your options.
