What is the Lump Sum Allowance?
The Lump Sum Allowance is the maximum benefits you can take from all your pension schemes as tax-free cash.
Usually, your Lump Sum Allowance is £268,275, however it may be higher if you have protection against the Lifetime Allowance, which was abolished from 6 April 2024.
From 6 April 2024, the following lump sums will count towards your Individual Lump Sum Allowance:
– A Pension commencement lump sum
– An uncrystallised funds pension lump sum — 25% tax-free element of the lump sum
– A stand alone lump sum
If you took benefits prior to 6 April 2024, these also need to be considered when calculating the remaining Lump Sum Allowance available.
If you are looking for expert advice on managing your Lump Sum Allowance, contact our pension’s specialists today. Our team in Leicester can discuss your pension arrangements and help with any queries you may have regarding your Lump Sum Allowance.
What is the Lump Sum & Death Benefit Allowance?
The Lump Sum & Death Benefit Allowance is the maximum benefits your or your beneficiaries can take from all your pension schemes as a lump sum.
Usually, your Lump Sum & Death Benefit Allowance is £1,073,100, however it may be higher if you have protection against the Lifetime Allowance, which was abolished from 6 April 2024.
Like the Lump Sum Allowance, lump sums taken from your pension schemes count towards your Individual Allowance.
For Lump Sum & Death Benefit Allowance advice, contact our team today for bespoke pension advice.
Protection against the Lifetime Allowance
There has been a range of protections provided against changes to the Lifetime Allowance. Initially Enhanced and Primary Protection were available to protect those with pension savings prior to 2006, with further protections having been available since 2006, in the form of Fixed Protections 2012, 2014 and 2016, and Individual Protections 2014 and 2016.
These protections can increase the Lump Sum Allowance and the Lump Sum & Death Benefit Allowance available.
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