The Lifetime Allowance
The Lifetime Allowance (LTA) is the total value of all pension benefits you can have without triggering an excess benefits tax charge. If the value of your pension benefits when you draw them (not including any state retirement pension, state pension credit or any partner's or dependant's pension you may be entitled to) is more than the LTA, or more than any protections you may have, you will have to pay tax on the excess benefits.
The LTA covers any pension benefits you may have in all tax-registered pension arrangements - not just the Local Government Pension Scheme (LGPS).
The LTA was introduced in 2006 and was reduced in 2012, 2014 and again in 2016. Each time the LTA reduced, if you had already planned your pension savings on the basis of the higher LTA, you have been able to protect your pension savings by applying to HM Revenue & Customs (HMRC) for a LTA protection.
The LTA steadily reduced from 2012/13 to 2017/18. From 2018/19 onwards the LTA increases each year in line with inflation, see below:
|Tax Year||Lifetime Allowance|