What is it?
The Lifetime Allowance is a limit on the value of benefits from your pension schemes – whether lump sums or retirement income – that can be paid out without triggering an extra tax charge. This page explains the rules, which may not necessarily affect you now but may impact you when you come to retire.
How much is the Lifetime Allowance?
The Lifetime Allowance for most people is £1.25 million for the 2014-15 tax year. It applies to the total of all the pensions you have, including the value of pensions promised through any defined benefit schemes you belong to, like the KPS-FS, but excluding your State Pension.
Why does it exist?
In essence, the Lifetime Allowance is intended to cap the level of tax advantaged pension funds that an individual can accumulate within their lifetime. So a tax charge is imposed on benefits built up in excess of the Lifetime Allowance.