If the value of your pensions are close to £1,030,000, or are likely to reach this by the time you retire, then you need to know about the Lifetime Allowance (LTA). The LTA is set by the government and limits the total amount you can build up in pension benefits over your lifetime while still enjoying the full tax benefits. If you go over the allowance you will generally pay a tax charge on the excess when you take a lump sum or income from your pension pot, transfer overseas or reach age 75 with unused pension benefits. Any excess may be subject to tax charges of:
This limit applies to the value of all your pension arrangements. This includes:
If you’re getting close to the pension Lifetime Allowance, there are things you can do to safeguard your money. These are known as ‘protection’ and they effectively give you your own Lifetime Allowance, but there are restrictions as well.
You can read more on how to apply for Lifetime Allowance protection on our free factsheets, or if you need help with Lifetime Allowance protection, call Fidelity's retirement services on 0800 368 6882 for details about our advice service.
The value of investments can go down as well as up so you may get back less than you invest. The value of tax savings and eligibility to invest in an ISA depend on personal circumstances. All tax rules may change in future. Pension money cannot usually be withdrawn until age 55.
The Government offers a free and impartial guidance service to help you understand your options at retirement. This is available via the web, telephone or face-to-face through government approved organisations, such as The Pensions Advisory Service and the Citizens Advice Bureau. You can find out more by going to pensionwise.gov.uk or by calling Pension Wise on 0800 138 3944.
This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to an authorised financial adviser.