- The government plans to abolish the pensions lifetime allowance from 2024
- Pension contributions will still be subject to annual restrictions
- It could be worth seeing the full detail of the legislation before resuming contributions
The government will abolish the pensions lifetime allowance (LTA), currently £1,073,100, from April 2024, and between 6 April this year and its abolition will waive any LTA charges due. This is welcome news if you are under 75, and saving into pensions whose value is likely to breach the limit or your pensions have already breached it meaning you were due to pay a charge at age 75 or sooner.
If you had stopped contributing to pensions to avoid breaching the LTA or because you had already breached it, you could consider resuming contributions after 6 April. Pensions are a tax-efficient way to build up money because assets within them can grow tax-free. If you are under age 75, your contributions get government tax relief at your marginal income tax rate of 20, 40 or 45 per cent. Workplace pensions also get contributions from your employer.