The auto-enrolment solution for Northern Ireland
Posted in General News and Newsletters
The lifetime allowance is a limit on the amount of pension benefit that can be drawn from pension schemes – whether lump sums or retirement income – and can be paid without triggering an extra tax charge.
The standard lifetime allowance increases from £1,030,000 to £1,055,000 in April 2019.
While most people aren’t affected by the lifetime allowance, you should take action if the value of your pension benefits is approaching, or above, the lifetime allowance. The test for the lifetime allowance is done each time you access a pension benefit.
You can also find more information about the lifetime allowance from the Pensions Advisory Service website. Click here for details.
The annual allowance is a limit on the amount that can be contributed to your pension each year, while still receiving tax relief. It's based on your earnings for the year and is capped at £40,000, although a lower limit of £4,000 may apply if you have already started accessing your pension.
The annual allowance applies across all of the schemes you belong to and includes all of the contributions that you or your employer pay.
If you exceed the annual allowance in a year, you won't receive tax relief on any contributions you paid that exceed the limit and you will be faced with an annual allowance charge.
If you think that you may be getting close to your annual allowance, or may have exceeded it, you may wish to consider taking advice from a regulated financial adviser.