What are the maximum benefits available from an occupational pension scheme?
For Final Salary Schemes, the scheme rules will usually allow you to accrue a maximum income of 2/3rds of your final salary. All benefits whether money purchase or final salary are limited to the Lifetime Allowance. Any benefits in excess of this limit are taxed at 55% if taken as a lump sum, or 25% if taken as income (in addition to your normal income tax). The lifetime allowance is £1.8m for the year 2010/11. When your Final Salary Scheme pension comes into payment, its capital value (calculated by multiplying your initial annual pension by 20) plus any lump sum must be checked against the remaining LTA. In addition to a regular income, you are also entitled to a tax-free lump sum. The current rules specify that at retirement you can take up to 25% of your pension fund as tax-free cash. If you were a member of an occupation pension scheme before 1989, and successfully obtained transitional protection, the rules depend on when you joined the scheme and when the scheme was set up. For
