The perennial rumours have once again started to circulate about the possible tax targets in the sights of the Chancellor as he seeks to recoup some of the extraordinary costs of the pandemic.

As usual, the pensions system is a cause for concern, with speculators and the media alike purporting all sorts of leaks from the Treasury.  This is, of course, standard fodder ahead of a Budget; but as the next Budget is not scheduled until March 2022, eyes and ears are pricked for the possibility of an Autumn statement.

We all know that a week is a long time in politics, but – let’s face it – six months is an eon in the midst of a pandemic!

The latest ‘’noise’’ is about the possibility of a reduction in the Lifetime Allowance… perhaps pegging it back to £800,000 or £900,000. Where these figures come from, who knows?  But the fact is, the Government have simply not been able to take their hands off the LTA ever since it was introduced back in April 2006. Since then, the allowance has been increased in the years up to 2012, then slashed a few times between then and 2016, increased marginally from 2018 through to 2020. It now stands at £1,073,100.

To add to all this confusion, there have been no less than eight levels of ‘’protection’’ introduced during this time which have attempted to limit the consequences of the Allowance for those individuals whose pension funds exceed (or may exceed) the pre-cut level of the Allowance.

So should savers be concerned? The main battle within the Cabinet appears to be between a Chancellor keen to recoup some of the extraordinary spending we have seen and a Prime Minister equally keen not to introduce measures that will make him unpopular – particularly with his core supporters. The ongoing tussle over the triple lock is a good example.

Personally, I wouldn’t like to make a call on whether the Lifetime Allowance will be tweaked, but there is no way that something won’t have to give and the burden will need to be at least seen to be reasonably equitable between the generations.

What does this mean for your RetireEasy LifePlan?

When RetireEasy built its LifePlan, the overarching principle was to give our customers the easiest and most user-friendly experience in mapping out their financial future. At a very early stage, RetireEasy took the decision not to clog or disturb the LifePlan experience by adding dozens of additional questions in an attempt to evaluate who had what level of protection and what Lifetime Allowance tax charge may apply.

As a straightforward alternative, where a potential Lifetime Allowance tax charge may apply, a customer can simply allow for this as a ‘’Future Cost’’ whether it is a one-off charge at 55% or a regular charge at 25% if the excess pension fund is withdrawn as a pension.

LifePlan can also calculate when a pension fund may exceed a customer’s personal Lifetime Allowance in the future.  LifePlan allows customers to set an individual growth rates to be applied to a pension fund plus add future lump sum or regular contributions.

The downloadable summary shows at-a-glance the annual value of the pension fund so any threat of exceeding the LTA can be easily spotted allowing the customer to consider all options and to plan for any potential LTA tax charge.