Pension simplification introduced two new controls, the Lifetime Allowance (LA) and Annual Allowance (AA). The LA is currently £1,073,100 and the individual AA is £60,000. From April 2023, the charge for exceeding the LA has been removed and the abolition of the LA will be delivered in a Finance Bill.
Most individuals are able to fund up to these limits with the possibility to also carrying forward unused AA from the previous three years. Exceeding the AA will trigger a tax charge.
Other changes introduced by pension simplification:
In addition, pension freedom gives individuals further and greater flexibility to access their pension savings from age 55*.
The changes included:
*From April 2028, you will have to be 57 before you can access your pension under the pension freedom rules
Pensions are a long-term investment. You may get back less than you put in. Pensions can be and are subject to tax and regulatory change therefore the tax treatment of pension benefits can and may change in the future.