Workplace Pensions: Tax Allowances
The question
To ask the Chancellor of the Exchequer, what assessment her Department has made of the potential impact of the Pensions (Abolition of Lifetime Allowance Charge etc) (No. 3) Regulations 2024 on people with enhance protection; and whether she has considered bringing forward further legislative proposals to ensure that their scheme-specific lump sum calculations are maintained relative to the position before 6 April 2024.
Answered by Torsten Bell
We are aware that recent changes made to the scheme-specific lump sum calculation are not operating as intended for those with certain forms of transitional protection, including those with enhanced protection. The result is that in some cases, entitlement to tax-free lump sums is smaller than prior to April 2024.
HMRC intends to bring forward legislation to address this issue by April 2026. Regulations will have effect from April 2024. This will ensure the calculation for scheme-specific lump sums is similar to the position at April 2024.
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