Testing your benefits against the lifetime allowance

By undertaking the simple 5 step test below you will be given an idea of whether you are close to the lifetime allowance. A model is being developed to help you work out whether, in future years, you may anticipate being affected by the lifetime allowance.

This test is simplified in order to make it easy to use. The result will give you an approximation of where you stand in relation to the lifetime allowance but is not intended to be definitive guidance. In the event that you are close to the lifetime allowance, you should seek Financial Advice.

Lifetime allowance Test

Please enter all figures in full without any extra characters such as commas or currency symbols. For example, the figure of £10,000 should just be entered as 10000.

Currently exceeding the lifetime allowance
(answer to step 5 negative)

If you have produced a positive answer in 5. above, then you are likely to be over the lifetime allowance at the current date. You should read the guidance on Exceeding the lifetime allowance and seek Financial Advice.

Currently well below the lifetime allowance
(answer to step 5 positive)

If you have produced a figure far below the lifetime allowance, then are unlikely to be effected by the lifetime allowance at this stage. However, you should review your position regularly – a good opportunity presents itself when you check your updated pension statement on the Total Reward Website.

Currently close to the lifetime allowance
(answer within +/- £200,000)

Pensions are long term savings and if you are close to the lifetime allowance but with sufficient time to continue saving, then you may soon find you exceed the lifetime allowance. For example a good year of investment returns could lead to your fund quickly moving towards the lifetime allowance. If you are in this category you should consider planning early and seeking Financial Advice now.

Notes:

This test is a simplification of the calculation that is undertaken to establish whether pension benefits are greater or less than the lifetime allowance. The calculation is usually undertaken at the date of crystallisation (which is the date that benefits are put into payment). A calculation undertaken earlier is an estimate and is for guidance only. It may not be relied upon as factors such as investment return, contributions, legislation and the lifetime allowance may change. For a precise examination of how the lifetime allowance impacts on you it is recommended that you seek Financial Advice.