How is my pension affected by the new Lifetime Allowance from 6 April 2006?
A. The Lifetime Allowance came into effect on 6 April 2006 and is set at £1.5 million for the tax year 2006/2007, increasing to £1.6 million for tax year 2007/2008. The Lifetime Allowance is the cumulative value of benefits that can be taken from all registered pension schemes before an additional tax charge is payable. This tax charge is called the Lifetime Allowance charge. The important point to note is that existing pensions will not be affected by the Lifetime Allowance charge. Neither will state pensions or dependant’s pensions which, themselves are not assessed against the Lifetime Allowance. The only way in which the Lifetime Allowance charge could affect you is if you become entitled to a new pension after 5 April 2006. Existing pensions will be taken into account in assessing any new pension that may put your cumulative value above the Lifetime Allowance. Please note that all existing pensions (excluding state and dependant’s pensions) and any new pension coming into payment
