From 6 April 2016, the pension lifetime allowance (LTA) is set to reduce to £1m. This reduction means many more individuals will be affected by the threshold and may face a LTA tax charge. Depending on the value of an individual’s pot (as at 5 April 2016), five choices are available when determining pension protection:
The key factors in deciding which option is best for you are:
- Value of pension benefits
- Age and/ or time to retirement
- Attitude to risk and expected investment returns
- Employer contributions
These variables are all interlinked and we would advise you to consider all of them in terms of your circumstances. The rules are complex and there isn’t a one size fits all option. It’s important to consider your pension planning goals and discuss with your advisor what is best for you.