Lifetime Allowance

The Lifetime allowance (LTA)The Lifetime Allowance or LTA is the amount of pension benefits that can be taken before a tax charge is payable at the point the pension benefits come into payment is being reduced from £1.25m to £1m from 6 April 2016. Protection against this reduction will be available for members who’ve already built up large pensions in the Teachers’ Pensions Scheme and elsewhere.

If you have benefits that are already in excess of £1m, or are likely to exceed £1m when you reach your Normal Pension Age (NPA)The age at which you're eligible to claim retirement benefits without actuarial reduction., you’ll want to consider applying for ‘transitional protection’.

From 6 April 2016, there'll be two new types of ‘transitional protection’:

Fixed Protection (FP16) – any member can apply for this protection, whether your benefits exceed £1million or not, provided you don’t have any ‘relevant benefit accrual’. Therefore you’ll need to consider taking steps to opt out of the Teachers' Pension Scheme and cease active membership of all other registered pension schemes before 5 April 2016.

Individual Protection (IP16) – you can apply for this protection if the value of your benefits in registered pension schemes from all sources is between £1m and £1.25m as at 5 April 2016. It will allow you to build up further benefits without losing this protection. However, the future LTA will be a capped at the lower of the value of your benefits at 6 April 2016 and £1.25m.

If you do have protection, then you'll need to have a reference number from HMRC in respect of the protection, before Teachers’ Pensions can calculate the benefits payable.

We've created a series of briefing notes to help you understand the changes.

Briefing notes