Lifetime Allowance

Total funds per individual will be subject to a Lifetime allowance, tested on drawing benefits, or death. The Allowance will be set initially at 1.5m from 2006, but will be increased gradually to £1.8m from 2010 and reviewed quinquennially thereafter.

A recovery charge of 55% will be made on funds in excess of the Lifetime Allowance, where the net excess can then be drawn as a lump sum.

For individuals with total funds above £1.5m in April 2006, their Lifetime Allowance will be the value of their funds on that day, plus RPI thereon. Individuals could alternatively elect to protect all subsequent investments growth from the recovery charge, but only if pension contributions cease.