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For members of the Local Government Pension Scheme in England and Wales

End of the lifetime allowance

This news article was published on 24 Jun 2024

The lifetime allowance used to limit the amount of pension you could build up in UK pension schemes before you had to pay extra tax. From 6 April 2024, the lifetime allowance is no longer in force.

What has replaced it?

Two lump sum limits were introduced from 6 April 2024. There is no limit on the amount of pension you can receive, but there is a limit on how much cash you can take from UK pensions before you have to pay extra tax.

In the LGPS, you can generally take up to 25% of the value of your benefits as a cash lump sum when your pension is first paid to you. Most members will not be affected because the maximum lump sum they can take is much lower than the new limits. If you have built up a large pension in the LGPS or a different scheme, the new limits may affect you.

If you have already been paid a pension or a lump sum from a UK pension scheme, you have already used up some of your lump sum allowance.

If you do exceed the limit, you will have to pay tax at your marginal rate.

Find out more about the new lump sum limits and transitional protections on the Tax page.

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