The sun may be shining (if the Great British summer permits!), but the Lifetime Allowance (LTA) freeze is most certainly here.
So, essentially, the total amount you can hold in your pension without being taxed on withdrawals is static for the next few years, which means that a growing number of people may need to start considering a more comprehensive range of savings options for retirement to avoid a potential tax bill.
Tax is currently payable at 55% on everything over the limit if you take the money as a lump sum, or 25% if you take the money in another way, such as drawdown or through an annuity. Suppose you’re nearing the Lifetime Allowance (LTA), and an increasing number of people will be in this situation due to the big freeze. In that case, it’s worth considering additional options available to complement saving for retirement.
There are a whole host of scenarios and outcomes depending on your circumstances. The calculations around pensions and the LTA can be very complex. So careful consideration of your options is essential before making any decisions.