Lifetime allowance is the amount of pension savings an individual can make over a working lifetime without paying tax. If an individual’s total pension savings exceed the lifetime allowance, a tax charge is due on the excess benefits.
Employees are more likely to be affected by the lifetime allowance if they have long service in the NHS Pension Scheme, a high income and benefits in other workplace or personal pension schemes. Encouraging staff to engage with their pension savings earlier may help employees take steps to mitigate a tax charge at retirement.
Our new briefing provides key information, including:
- what lifetime allowance is
- the lifetime allowance charge
- who is likely to be affected
- options for affected staff.
Pension tax is a complex area and we have published a series of resources on our pension resource library to support your conversations with staff.