I have prepared a checklist of four simple steps to complete for trustees and pensions managers.
The Lifetime Allowance will be abolished formally on 6 April 2024. This is a major exercise involving the introduction of two new allowances for tax-free lump sums, hundreds of changes to the legislation and more than a year’s work by HMRC. Many pension scheme members will see little change as their benefits are well within the tax-free allowances, but for some there could be material changes and there are a lot of technical changes that pensions administrators need to make.
I suggest four simple steps to ensure you don’t get caught out:
Check your pension schemes (including special promises, unregistered schemes and top-up arrangements) to see whether any benefits have a direct link to the Lifetime Allowance. If for example, you have an LTA cap you might need to take action before 6 April to avoid an unintended jump in liabilities.
Ask your administrator to let you know about any high net-worth retirements, such as those close to the allowances or those with Lifetime Allowance protection, due to come up over the next few months and also to notify you of any deaths, ill-health cases or further retirements that arise in respect of such members.
These cases may need extra input and legal advice. Check that your administrator had updated their processes, communications and systems for the changes. There is a lot for them to do.
Consider whether the changes create any new opportunities but also, given Labour’s recent statements about still intending to reverse the changes, whether any current projects need accelerating.
Our News Alert provides more information on the changes.
