The standard lifetime allowance is currently £1,030,000, having fallen from £1.25 million in April 2016. From 6 April 2018 the standard lifetime allowance will become index-linked, which means it will rise with the Consumer Price Index (CPI) measure of inflation.
Whenever you access your pension benefits, the value of the benefits taken is tested against your lifetime allowance. This process is known as a Benefit Crystallisation Event (BCE).
Each time your pensions are measured against the lifetime allowance you will receive a certificate showing the percentage of the standard lifetime allowance this has used. Unless you hold lifetime allowance protection, using up more than the standard lifetime allowance will result in a tax charge.
This article is available to NAHT members only.