Abolish the Life Times Allowance (LTA) on pension savings

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Abolish the Life Times Allowance (LTA) on pension savings

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The LTA is amount you can have in your pension pot before you start being taxed at the excess at 55%. It is not calculated on the amount you contribute to your pension. It is calculated on what you have in it on retirement. This depends on your rate of return (and is therefore unpredictable). That turns pension saving into an admin-heavy guessing game. The LTA is also deeply unfair. Calculation anomalies mean that those with DC pensions hit it at an income level of around £25,000 before hitting a the punitive 55% tax rate. Those with DB pensions (most of the public sector) get more like £50,000. The differing levels of protected pensions are also unfair. Some have £1.8m plus. Those saving now get £1m. At Moneyweek (www.moneyweek.com) we think this iniquitous and confusing limit should be abolished immediately.

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