Budget 2021 – Pensions Lifetime Allowance frozen
In the budget, the Chancellor confirmed that the pensions Lifetime Allowance (LTA) limit would be frozen at its current level of £1,073,100 up to and including 2025/26.
Since 2018/19 the LTA limit has increased each year in line with inflation to the current limit of £1,073,100, however the Chancellor announced in the budget that it would be frozen at its current level up to and including 2025/26.
The freeze will not affect the vast majority of LGPS members and only members on higher salaries with a lot of pension membership are likely to be impacted.
What is the LTA?
The LTA is the total capital value of all pension benefits you can have without triggering an excess benefits tax charge.
The capital value of your benefits in the LGPS is calculated by multiplying your expected annual pension entitlement by 20 plus the value of any tax-free lump sum you are due.
You will be affected by the LTA if your annual pension in the LGPS is more than £53,655 (or less should you have a lump sum entitlement).
For further information on LTA please visit the Money Advice Service website.