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Standard Life warns of LTA deadline

Up to 360,000 Britons will be affected by the reduction in the pension Lifetime Allowance (LTA), according to Standard Life.

The firm, which has been working with businesses to help them cope with the reduction in LTA from £1.5m to £1.25m (effective from 6 April 2014), predicts the change will have an immediate impact upon 30,000 people, with this figure rising to 360,000 in the long term.

Should workplace pension savers inadvertently exceed the LTA limit they will expose as much as £250,000 of their pension savings to a substantial 55% tax charge (a tax bill of £137,500).

In addition to high earners, those who have served a company for a long time are likeliest to be affected (as well as future high earners).

It is also possible that those with sizeable pension pots could exceed the LTA even if they stopped paying into their pots immediately.

Alistair Hardie, head of customer consolidation at Standard Life, advised those who are concerned they might be affected by the decreasing LTA to seek financial advice soon.

Hardie recommended that individuals should have arranged a meeting with a financial adviser by the end of February, otherwise action may not be possible prior to the 6 April deadline.

Gathering information from various companies with which an individual has a pension could take time, Hardie elaborated, especially if the information cannot be put together online.

Research commissioned by Standard Life and conducted by YouGov found only 31% of those earning £50,000 or more (the group likeliest to be affected by the cut in LTA) know what the LTA is.

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