Experts in complex pension advice for high earners and those previously capped by Lifetime Allowance charges

Lifetime Allowance Pension

Your questions answered

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The 2023 Spring Budget impacted many high earning workers and pensions which exceed the previous £1,073,100 cap. We aim to answer some of your concerns and explore new opportunities.

Since “A” day April 2006 there have been many changes to how much you can put into pensions in a year and over a lifetime. These changes have created a number of Protection schemes that are incredibly complex.

The recent budget though could have created opportunities for people wanting to save into pensions right now or retire in the near future.

Nick Onslow - Chartered Financial Planner

“The removal of the Lifetime Allowance could be great news for Pension savers, as it will stop the punitive tax charges of up to 55% for anyone breaching the allowance. It has also reduced the administrative burden that savers and pension fund providers have faced since 2006.”
Nick Onslow – Chartered Financial Planner

What changed for lifetime allowances(LTA)?

  • Increase in the Money Purchase Annual Allowance from £4,000 – £10,000
  • Increase in the Annual Allowance from £40,000 – £60,000
  • Removal of the Lifetime Allowance
  • Tax-free cash will still remain at 25% of an individual’s Lifetime Allowance
    • The current rate is £1,073,100 @ 25% = £268,275
    • Or 25% of any protection scheme they may have.
  • The adjusted income threshold moves from £240,000 to £260,000 for higher earners.

Is it now worth switching assets into my pension?

Depending on your individual circumstances, this could be an excellent time to move funds into pensions and maximise tax relief. It’s now a great time to speak to an adviser about what options are available to you that align to your financial goals.

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Will my Tax-free cash increase now that the Lifetime Allowance has gone?

The tax-free cash will still remain at 25% of an individual’s Lifetime Allowance.

  • The current rate is £1,073,100 @ 25% = £268,275
  • Or 25% of any protection scheme they may have.

I have crystalised my pension is there anything I can do?

People who have crystalised a pension this year and paid a charge on the excess amount above the lifetime allowance are likely to wonder if they can apply for any kind of rebate, but unfortunately, based on previous taxation changes, this will be unlikely. Speak to an adviser to get full confirmation on what is available to you.

If you have taken part or all of your tax-free cash from your pension you face no restrictions on future contributions other than the new £60,000 Annual Allowance.

If you have taken any income from your pension you were restricted to the Money Purchase Annual Allowance of £4,000 on annual contributions

This has increased to £10,000.

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I have multiple pensions what can I do?

Some older pensions policies don’t have the flexibilities to allow you to drawdown on the funds and can have higher levels of ongoing charges.

By reviewing and potentially moving funds together into one place, you could reduce fees and administration, select the right funds to meet your needs and ensure that any unused funds can be earmarked for your beneficiaries.

However combining pensions might not always be the best solution, a review of the benefits and fees would all need to be considered when reviewing the value of a pension in relation to your needs. You may require the assistance of an independent financial adviser to correctly calculate your complex pension affairs.

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How does the Lifetime Allowance effect long term pension planning?

Opposing parties may wish to reinstate the lifetime allowance if elected and could leave those with significant pensions pots in some amount of uncertainty. Any decisions should therefore be weighed up with the potential downsides of the lifetime allowance making a comeback in the future.

How do pensions fit into a financial plan?

Most financial plans will aim to limit the amount of tax you pay when you accumulate and spend your money.

Pensions can be utilised to grow your wealth tax efficiently. The recent increase in annual allowance to £60,000 will permit greater levels of pension contribution. You can get tax relief on contributions at a higher rate of income tax than you would receive when you withdraw the money. It can also save you having to pay National Insurance contributions.

With the reduction of Corporation Tax, your employers’ contributions could also make a significant difference to your pension pot over time.

How flexible are pensions?

Prior to 2016 and the introduction of pension freedoms the vast majority of people saw pensions as simply a way to fund their retirement. They took out the 25% tax free cash and purchased an annuity at whatever the rate was available at that time.

However pensions are much more flexible today, It is now common to see pensions as another form of savings that can be used alongside other investments such as ISAs, Bonds and Unit Trusts to create a far more tax efficient income.

Who are Progeny?

Progeny is the first and only firm in the UK to bring together independent financial planning, asset management, property, tax, HR and private and corporate legal services.

As pension specialists working alongside your tax, financial planners and legal advisers, we obtain an in-depth knowledge of your circumstances all under one roof. We can then provide bespoke advice, ensuring that your investments are structured in the most tax-efficient manner and that ongoing pension contributions are best for your overall circumstances.

Downloadable report Spring Budget 2023

View the report
Spring Budget 2023 - Downloadable Report

This article is distributed for educational purposes and should not be considered investment advice or an offer of any security for sale. This article contains the opinions of the author but not necessarily the Firm and does not represent a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable but is not guaranteed.

Progeny is a trading style of Progeny Wealth Limited. Progeny Wealth Limited is a limited company registered in England and Wales number 01408197, authorised and regulated by the Financial Conduct Authority and is entered on the Financial Services Register ( under reference 116460.

Past performance is not indicative of future results and the value of investments can fall as well as rise. No representation is made that the stated results will be replicated.

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