The pensions lifetime allowance was reduced to £1m from £1.25m on 6 April 2016. This threshold is tested when you start to take your pension
benefits. If your pension fund value exceeds the lifetime allowance at that point, you need to pay a tax charge on the excess at 55% or 25% (depending on whether you take a cash lump sum or not).
If you have retired since 5 April 2016, or expect to do so shortly, you should assess whether the value of your pension savings does exceed £1m. A pension valuation from a qualified IFA may be required to do this. You may be surprised at the value of your total pension funds, as a total of £1m can be easily achieved by making regular pension contributions over 30 to 40 years.
Where you find your pension pot is around the £1m mark you should consider applying for fixed protection 2016 (FP2016) or individual protection 2016 (IP2016). These procedures fix your
lifetime allowance at the lower of your pension pot value at 5 April 2016 and £1.25m.
You need to apply for either type of fixed protection online, through the HMRC services page. We can help you through this process, but the first step is to think about how much your pension pot could be worth.