Pension reform threatens protected tax free cash

The 2006 A-day rules allowed investors to take 25% of their pension as tax free cash, but any existing schemes that offered more than 25% as a tax free lump sum could be protected. This protected amount increased in line with the LTA, which rose by 20% from £1.5m to £1.8m in 2010. However, the government's plans to reduce the LTA to £1.5m from April 2012, could wipe out any increase expected in protected tax free cash, Skandia warns. This could mean ‘dramatic' change for people over 55, as they would have to take their pension before April 2012 to protect their higher tax free cash...