For many people, retirement will be funded, in the main, by their pension savings.
It is therefore vital that you understand how to grow your pension whilst protecting it from certain tax charges.
The Lifetime Allowance (LTA) is one such charge, applied to all pensions impacting the amount you can take, either as a lump sum or retirement income.
In 2021, the Lifetime Allowance was set at £1,073,100. This means if your pensions exceed this, you could face a charge of up to 55%.
This charge is applied when you take any benefits before 75; again at 75 or if you pass away before you reach 75.
We have created this helpful calculator to assist you in determining if or when you could breach the Lifetime Allowance.
It should take no longer than 5 minutes to complete, and once you have, you will receive a tailored report detailing the likelihood of exceeding the Lifetime Allowance and the key points to consider when managing your risks.
Please note that there are several complex circumstances outside the scope of this calculator which would require expert advice.
If you have already drawn benefits, either as income, a lump sum or both, and you are concerned about the Lifetime Allowance, you should seek bespoke financial advice.
Similarly, if you have any Lifetime Allowance protections, you should also seek advice. If you would like to speak with one of our advisers about your complex circumstances, you can do so here.
To showcase how Lifetime Allowance can impact those in varying situations, we have also created some short case studies you may find of interest.
At Mazars, our aim is simple, to help you turn your what ifs into hows. We develop long-term strategies to meet your needs, whatever your stage of life, career path or goals.
Our Financial Planning team are personable and highly qualified. The majority are Chartered Financial Planners, many of whom also hold Certified Financial Planner status, an internationally recognised advanced financial planning qualification.
We are ranked as one of the top 5 Financial Planning firms by the Financial Times. We are also proud to have been awarded the Citywire New Model Advisor award for National Financial Planning Team of the Year and the Gold Standard Award for Independent Financial Advice for the last eight years.
Client feedback is of the utmost importance to us. To read what our clients think of our service, you can view our VouchedFor feedback here.
If you would like support with your pensions, or if you would like to discuss your financial aspirations, please do get in touch.
Rory is 65 and has been in recruitment all his working life. He has had lots of roles, some periods whereby he did not save into pensions and others where he did. He did not save his bonuses. He has previously consolidated his plans into one scheme valued at £350k. It is not expected that Rory will exceed the Lifetime Allowance.
Craig is 57 and is an engineer who has worked for a variety of different companies, accumulating 6 pensions currently valued at £35k, £12k, £75k, £180k, £200k. His current workplace scheme is valued at £40k, into which he and his employer pay a total annual contribution of £10k. As such, Craig's total pension value at present is £542k. By age 65, this is likely to have grown to c. £832k. It is expected...
Ashley is 60 and has worked in the NHS as a nurse for a total of 35 years. He earns £35k p.a. and has for most of his career, barring some promotions early on. Ashley has accrued a pension of £17k p.a. and a lump sum of £51k upon retirement at 65. It is estimated that for Lifetime Allowance purposes, Ashley has a pension value of £391k and is unlikely, unless circumstances change, to have a charge.
Lucy is 55 and runs her own business. She set this up in her mid 30's having undertaken a few other roles. Lucy has two small final salary pensions that are projected to pay her £4k p.a. and £6k p.a. in retirement. Following advice, Lucy started making further pension savings in her mid 40's. Since then, Lucy contributed £100k aged 45 and then £40k p.a. for a further 10 years, this pension is now...
Pensions are a tax-efficient way to save. An individual receives tax relief on the money paid in, tax-free growth during the period that they hold a pension, and the ability to access money tax-efficiently in retirement (a combination of tax-free cash and taxable income). There is no limit on how much can be built up within pensions, however taxes may be applied upon drawdown.
Our Lifetime Allowance FAQs explain all you need to know about the recent freeze, how this could affect you and what you need to do.
This website uses cookies.
Some of these cookies are necessary, while others help us analyse our traffic, serve advertising and deliver customised experiences for you.
For more information on the cookies we use, please refer to our Privacy Policy.
This website cannot function properly without these cookies.
Analytical cookies help us enhance our website by collecting information on its usage.
We use marketing cookies to increase the relevancy of our advertising campaigns.