Pensions reform: Why there is a new de facto lifetime allowance

LTA amounted to a 'Sword of Damocles' hanging over savers

clock • 4 min read

Jon Greer looks at the abolition of the LTA, which he says was not the 'open season' for pensions as first reported due to the cap on tax-free cash swiftly put in its place...

The lifetime allowance (LTA) might have been scrapped, but a new de facto limit has taken its throne. Ditching the LTA is a seismic change to the pension landscape, but within minutes of the Budget documents coming out, it became clear that while the allowance was gone, a tax-free cash limit had been put in its place. Arguably not much has changed from a tax-free cash point of view, the limits on the amount of tax-free cash you can take in the 2022/23 and the 23/24 tax year are essentially the same. However, rather than limiting tax-free cash with reference to the LTA we now have an u...

To continue reading this article...

Join Professional Adviser for free

  • Unlimited access to real-time news, industry insights and market intelligence
  • Stay ahead of the curve with spotlights on emerging trends and technologies
  • Receive breaking news stories straight to your inbox in the daily newsletters
  • Make smart business decisions with the latest developments in regulation, investing retirement and protection
  • Members-only access to the editor’s weekly Friday commentary
  • Be the first to hear about our events and awards programmes

Join

 

Already a Professional Adviser member?

Login

More on Pensions

FCA outlines thinking on using pension pots for house deposits

FCA outlines thinking on using pension pots for house deposits

FCA CEO Nikhil Rathi ponders radical thinking on pension savings

Jonathan Stapleton
clock 02 April 2025 • 3 min read
IFS: Growing DC market needs reform to help savers manage risks

IFS: Growing DC market needs reform to help savers manage risks

Savers facing ‘stark’ challenges managing DC pots in retirement

Martin Richmond
clock 02 April 2025 • 6 min read
AJ Bell sells Platinum SIPP and SSAS business in £25m deal

AJ Bell sells Platinum SIPP and SSAS business in £25m deal

InvestAcc Group takes over £3.2bn book of business

Jenna Brown
clock 27 March 2025 • 1 min read