The lifetime allowance was introduced in April 2006 (A-Day) as part of the government's objective for a fair and sustainable pension system. The aim was to put a cap on the value of total pension benefits that would be treated beneficially for tax. When the allowance was introduced, investment outlooks were positive and the intention was that the maximum limit would increase, broadly in line with inflation each year. Under the coalition government however, the lifetime allowance has been reduced as part of their deficit reduction plans, protecting the public finances from the growing cost of tax relief, especially the amount of that relief going to higher earners.
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