What is The Lifetime Allowance (LTA)?
The maximum combined amount of pension savings, (excluding the State Pension) that you as an individual are permitted to hold without incurring a tax charge.
The Lifetime Allowance (LTA) in the 2019/20 tax year is £1.055m
Why was it introduced?
This legislation is not unique to the NHS, as the principles apply to all pension holders however, the excellent benefits that the NHS Pension Scheme provides mean that a significant proportion of NHS employees will have to consider the LTA and how it will impact upon them.
The concept of the LTA was first introduced in April 2006 through the Finance Act. This date is often referred to as ‘A-Day’ or ‘pension simplification’ but, invariably, ‘simple’ can be the furthest thing from the truth. From 2006 the limit was set at £1.5m and grew steadily as shown below: