Lifetime Allowance (LTA)

• The LTA takes account of the total value of an individual’s pension benefits, excluding state benefits and dependants’ pensions, across all registered schemes.
• The amount of the allowance in 2006/07 is £1.5 million and this will increase annually.
• When retirement benefits are drawn, the value of all pension scheme benefits are added together and tested against the LTA.
• Any benefits above the LTA will be subject to a tax charge.

To assess whether you would be affected the following formula should be applied to your benefits:

(Annual Pension X 20) + Lump Sump/Lifetime Allowance X100 = LTA%

• If the percentage exceeds 100%, you will be liable for the LTA charge unless you have a transitional protection certificate.