Annual allowance

The annual allowance, which is set by HM Revenue and Customs (HMRC), is the amount by which the value of your pension benefits may increase in any one year without you having to pay a tax charge.

The assessment covers any pension benefits you may have in any tax-registered pension arrangements where you have been a contributing member of the scheme during the tax year.

You will usually only have an annual allowance tax charge if the value of the pension growth in a tax year is more than the annual allowance limit.  For 2022/2023 the annual allowance was £40,000.  For 2023/2024 onwards, the annual allowance is £60,000.  For high earners the allowance may be lower.   

There is also a three year carry forward which allows you to carry forward unused annual allowance from the last three years. 

Our annual allowance factsheet (PDF 229KB) has more information about the annual allowance,

You can also visit the national LGPS member website to watch a short video about annual allowance.

 

 

Lump sum limits

Two lump sum limits were introduced from 6 April 2024.  You can read more about these limits on the LGPS member website.  When you retire, we will need to ask you about lump sums you may have received from other pension schemes, so that we can check to see if you will go over the limits.  Most members will not be affected because the maximum lump sum they can take is lower than the limits.  

 

If you have any questions about tax on your LGPS pension benefits, please contact the pension fund.