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Replacement of the lifetime allowance

The legislation that replaced the lifetime allowance framework became effective on 6 April 2024. You’ll find more information on the new rules and transitional arrangements below.

An overview of the lifetime allowance replacement legislation

The pension lifetime allowance is no more and three new allowances are now in place. In just 10 minutes, Paul Squirrell runs through these allowances, how they work and the payments that are tested against them. He also covers off the transitional arrangements and which clients may need to take action to ensure they are not disadvantaged by the new rules.

10-minute watch
Video Transcript
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Tax treatment of money purchase death benefit payments

Under the new Lifetime Allowance (LTA) replacement regime, one of the three new allowances is the Lump Sum and Death Benefit Allowance (LSDBA). If an individual took benefits prior to 6 April 2024 that used some or all of their LTA, their LSDBA may be reduced. Here is a rough guide – including a flowchart – to the tax treatment of money purchase death benefit payments.

2-min read

Financial planning considerations for 2024/25 and the LTA replacement regime

In the Spring Budget last year, a number of pension allowances were increased. However, the real ‘game changer’ in terms of saving for retirement was the abolition of the lifetime allowance. In this webinar, Paul Squirrell explains why the door is now wide open for pension savings and covers all the new allowances and transitional arrangements. He also looks at saving outside of a pension, considering ISAs, bonds and collectives.

44-minute watch

Video chapters - navigate easily to your area of interest

00:00 - Welcome and introduction 
01:04 - Overview of the changes to pension legislation 
06:53 - The lump sum and death benefit allowance 
11:02 - Beneficiary’s drawdown and pension death benefits 
15:51 - Transitional arrangements and the transitional tax free amount certificate 
26:08 - Protected tax-free cash 
31:44 - The overseas transfer allowance 
33:01 - The new legislation and accessing benefits 
35:32 - Potential further legislation changes under a new government 
37:39 - Changes to ISAs
39:12 - Bonds versus collectives 
42:22 - Key takeaways

Video transcript
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The LTA replacement regime explained

The lifetime allowance (LTA) replacement regime has seen the introduction of three new allowances. The changes are good news for clients saving for their retirement but there is lots of detail to consider as we enter into the new tax year. Paul Squirrell examines the new rules and what they mean for clients.

5-min read

The LSDBA and death benefits payments
Calculating amount

Transitional tax-free amount certificates

Where clients accessed pension savings prior to 6 April 2024 and so used part or all of their lifetime allowance, the new lump sum allowance and lump sum and death benefit allowance are reduced by a “default” calculation. However, individuals have the option to apply for a “transitional tax-free amount certificate” where this would provide them with additional allowances.

Article: 5-min read

Should a client apply for a Transitional Tax-Free Amount Certificate?

Form: TTFAC information request
Woman raising hand

Pension Forum: The lifetime allowance replacement regime takes centre stage

Pension legislation can never be described as straightforward and, judging by our Pension Forum, the intricacies of the new lifetime allowance replacement regime are causing some confusion. Paul Squirrell has taken time out to answer questions on what has actually changed under the new regime, the tests made against the lump sum and death benefit allowance and the rules that apply to death benefit payments.

Visit the Pension forum
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