Make sense of April's lifetime allowance changes

The government has estimated over 55,000 savers could be impacted by the reduced standard lifetime allowance (SLA).*

We think this figure underestimates the impact – many more could be affected in the future, due to ongoing contributions or simply from investment growth.

The latest SLA reduction provides an excellent opportunity to review all of your clients' pension arrangements and offer them advice on what action to take. Our four-step guide shows you how...

*Source: HM Revenue & Customs policy paper – Reduction of pensions lifetime allowance, December 2015.

Step 1 – segment your clients.

Gather this information to identify impacted clients and decide what action they could take as a result.

What's the total value of their pension savings on 5 April 2016?

When do they intend to take their benefits?

What's their investment strategy and likely returns (for clients in defined contribution plans)?

Do they have any control over their remuneration package?

Step 2 – plan ahead

Many clients could be at risk of breaching the SLA in the future, depending on ongoing contributions and investment growth.

This example shows the impact investment growth could have on pension savings in as little as ten years:

2016 £650,000 + Existing pension savings at 6% Annual investment growth will be in 2026 £1 million + Future pension savings

*This is a simplified example for illustrative purposes which assumes the lifetime allowance increases in line with the Consumer Price Index at 2% from 2018, a growth rate of 6% and no further contributions.

Step 3 – consider the new protections

Affected clients could benefit from either, or both, forms of transitional protection.

Fixed 2016

Gives an SLA of £1.25 million.

No further contributions to defined contribution schemes or benefits building in Defined Benefit schemes.

No previous primary, enhanced or fixed protections.

Up until benefits are taken.

Individual 2016

Gives an SLA equal to the actual value of pension savings on 5 April 2016 – up to £1.25 million maximum.

Protected amount won’t grow in the future unless the baseline lifetime allowance exceeds the amount.

No primary or individual 2014 protections.

Up until benefits are taken.

To find out more about the transitional protections visit the Adviser Technical Zone at

Step 4 – explore other options

Here's some other options to explore with your client:


Would combining pension savings make it easier to monitor their risk of breaching the the SLA in the future?


Could they benefit from maximising pension contributions now, before applying for protection?


If pension contributions are no longer possible, could other savings and investment vehicles provide an alternative?

Aegon's award-winning platform has the solutions...

A SIPP, ISA and GIA let your clients diversify their portfolios and bring their savings together.

Our tiered and capped platform administration charge encourages consolidation and rewards clients with more savings. There's no charge for assets over £250,000.

Report Zone provides extensive and in-depth MI to help you identify opportunities, keep track of business and demonstrate the value of your advice.

Access to a wide range of investment options, including Secure Retirement Income – the first secure drawdown solution on platform.

For more information, please speak to your usual Aegon contact or visit:

For adviser use only – not approved for use with clients.

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