Taxation logo taxation mission text

Since 1927 the leading authority on tax law, practice and administration

Lifetime allowance and members of defined benefit pension schemes

21 February 2022 / Mike Thexton
Issue: 4829 / Categories: Comment & Analysis
72773
No money for butter

Key points

  • If the value of the pension fund exceeds the lifetime allowance on the date benefits are drawn a charge applies.
  • In a final salary scheme the LTA charge would apply an annual reduction to the pension.
  • Further complications for clients who have a final salary and a defined contribution pension.
  • Deferring the pension may not be beneficial.
  • Clients should discuss their pension options with their independent financial adviser.

‘When I am an old woman I shall wear purple’ is the famous first line of Jenny Joseph’s 1961 poem ‘Warning’ one of the UK’s favourite reflections on ageing. She promises to spend her pension on unsuitable things and have no money left for butter. Perhaps it is a sign of growing old – I am two years senior to the poem – that I seem to be reflecting more on pensions these days. My clients are growing old...

Only subscribers may read the full article

Alternatively, you can register free of charge to read a limited amount of subscriber content per month.
Once you have registered, you will receive an email directing you back to read this item in full.
FIVE WAYS TO MAKE ACCOUNTS PRODUCTION AND TAX EASIER.
Download the exclusive Xero
free report here.

New queries
Please email any questions you might have
to: taxation@lexisnexis.co.uk.

back to top icon