Annual Allowance & Lifetime Allowance

 

The amount that can be paid into pensions known as the 'Annual Allowance' will reduce from £50,000 to £40,000 per annum from 2014/15.

The Carry Forward rules remain unchanged, but the amounts will change.  The amount for Carry Forward will be £50,000 for 2013/14 but then reduce to £40,000 thereafter.

The Standard Lifetime Allowance is also to reduce from the current £1.5 million to £1.25 million from 2014/15.

There will be a new 2014 Fixed Protection to set the Lifetime Allowance at £1.5 million but anyone taking out this protection will no longer be able to make further pension contributions otherwise the protection will be lost.

2014 Fixed Protection must be applied for by 5th April 2014.

Another form of protection will also be available known as Individual Protection.  This is currently going through consultation.  Individual Protection will allow individuals whose benefits are at or above £1.25 million at 5th April 2014 to continue to contribute to their pensions.  Any pension benefits above the individuals protected Lifetime Allowance will be subject to a lifetime allowance charge when benefits are taken.

There will be a three year window up to 5th April 2017 to apply for Individual Protection.

More details on Individual Protection will follow in due course. 

 

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