The Chancellor of the Exchequer delivered his final Budget of this Parliament on 18 March 2015.

The only change targeted at pensions this time around was the reduction in the Lifetime Allowance (LTA) from £1.25 million to £1 million with effect from 6 April 2016. Furthermore, the Government will index the Lifetime Allowance from 2018 in line with the Consumer Prices Index.

96% of individuals currently approaching retirement have a pension pot worth less than £1 million, so this change will affect only the wealthiest pension savers.

Because of the lowering of the threshold, more individuals will be affected in future. The Chancellor has therefore announced that Transitional protection for pension rights already over £1m will be introduced alongside this reduction to ensure the change is not retrospective.

The Annual Allowance will remain at £40,000 for defined benefit schemes such as the Teachers’ Pension Scheme, but this could reduce to £30,000 in a tax year if a member accesses the new pension flexibilities on or after 6 April 2015 and contributes £10,000 or more to a Defined Contribution scheme.

Finally, HMRC have confirmed that the new career average scheme has to be registered as a separate scheme in its own right. This means that members who had previously applied and received Enhanced Protection, Fixed Protection 2012 and Fixed Protection 2014 could potentially lose this protection if they join the new scheme and start paying pension contributions.

If you think you might be affected by these changes, we recommend that you contact an independent financial adviser.