Lifetime Allowance and Lump Sum Limits
The Lifetime Allowance (LTA) was abolished from April 2024, removing the overall cap on pension savings. However, two important limits remain: the Lump Sum Allowance (LSA) of £268,275 caps the tax-free cash you can take, and the Lump Sum and Death Benefit Allowance (LSDBA) of £1,073,100 caps the total tax-free lump sums available including death benefits.
Lump Sum Allowance (LSA)
The LSA limits the total amount of tax-free lump sums (pension commencement lump sums) you can take from all your pension schemes to £268,275. This is equivalent to 25% of the old LTA of £1,073,100. If your pension pots are large enough that 25% exceeds £268,275, you will pay income tax at your marginal rate on any lump sum above this limit.
What Changed in April 2024
Before abolition, exceeding the LTA of £1,073,100 triggered a 55% tax charge on excess lump sums or a 25% charge on excess taken as income. Now, there is no limit on the total size of your pension pots. The remaining limits only affect how much you can take as tax-free cash. This is a significant change for high earners who were previously discouraged from saving more.
Frequently Asked Questions
Is there now no limit on pension savings?â–¾
There is no overall limit on the value of your pension pots. However, the annual allowance (£60,000) still limits how much you can contribute each year with tax relief. The lump sum allowances limit how much you can take tax-free. Any pension income above these limits is taxed at your marginal rate.
What if I have LTA protection?â–¾
If you hold Fixed Protection or Individual Protection, your lump sum allowances may be higher than the standard amounts. For example, if you have Individual Protection 2016 with a protected amount of £1.2m, your LSA would be 25% of that (£300,000). It is important to maintain these protections as they provide a higher tax-free cash limit.
How do death benefits work under the new rules?â–¾
If you die before 75, your beneficiaries can receive your pension tax-free up to the LSDBA (£1,073,100), minus any tax-free lump sums you have already taken. Any excess is taxed at the beneficiary's marginal rate. If you die after 75, all pension benefits are taxed at the beneficiary's marginal rate regardless of the LSDBA.
Calclypso Editorial Team
Allowance figures verified against HMRC 2025-26 guidance. Last updated: April 2026. This calculator provides projections only. Seek professional pension advice for your situation.