Ian Price, divisional director of pensions and consultancy at St James’s Place Wealth Management, says he hopes that now we have reached a limit of £1.25m there will be no further changes.
He says: “It is important to realise that while governments have made changes to the lifetime allowance, they haven’t subsequently changed the rules for fixed, primary or enhanced protection.
“So the key is to take time out and review your pension arrangements. If you think you are close to or likely to exceed the reduced lifetime allowance, then doing nothing is not an option.”
Mike Morrison, head of platform marketing of AJ Bell, says while we do not know if the lifetime allowance will change again there are political murmurings with regard to restricting and changing pension tax relief.
Mr Morrison points out the government clearly views the lifetime allowance as an easy administrative way of restricting tax relief.
He says: “I think it will be eventually be necessary to review the lifetime allowance upwards because of the effects of inflation and any further changes in longevity and gilt yields.
“The uncertainty over the future level of the lifetime allowance also means that anyone who ceases making contributions due to having fixed protection could well be missing an opportunity to maximise pension funding not knowing what the lifetime allowance is likely to be in the future.”
John Lawson, head of policy at Aviva, warns if the lifetime allowance is further reduced, it is highly unlikely that those with protection would have this removed and further forms of protection may then be introduced for those newly affected.
If the standard lifetime allowance increases in the future beyond the levels protected, Mr Lawson says the protections would no longer be necessary as the standard lifetime allowance would apply.
