Eligibility
Lifetime AllowanceKeep informed
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Lifetime Allowance
There is no limit to the size of the fund that a member may have. However funds in excess of the Standard Lifetime Allowance will be subject to a recovery charge unless they are protected under primary and/or enhanced protection (Personal Lifetime Allowance).
The Standard Lifetime Allowance for the next five years has been set as follows:
|
Tax Year
|
Standard Lifetime Allowance
(gross) |
|
2006/2007
|
£1.5 million
|
|
2007/2008
|
£1.6 million
|
|
2008/2009
|
£1.65 million
|
|
2009/2010
|
£1.75 million
|
|
2010/2011
|
£1.8 million
|
In order to measure pension funds with the Lifetime Allowance all pension benefits accrued must be included. The member’s benefits will either be crystallised or uncrystallised.
Crystallised Benefits
These are benefits that are currently in payment i.e. income drawdown or annuity.
Uncrystallised Benefits
These are benefits that have yet to be taken.
Recovery Charge
Where benefits exceed the Standard or Personal Lifetime Allowance and are taken as pension income the recovery charge on the excess is 25%.
If funds are taken as a lump sum and exceed the Standard or Personal Lifetime Allowance the recovery charge on the excess is 55%.