The lifetime allowance was originally introduced to ensure that people who have saved a large amount of pension provision do not benefit unduly from tax advantages. This meant that people with pension savings above the allowance had to pay higher taxation on their pension payments.
However, the abolition of the LTA will now make it possible for people to transfer all their pension savings from the UK to other countries tax-free. This is a significant change that could make the decision to transfer abroad more attractive for many individuals.
This change may also have an impact on the profitability of pension products. Clients should therefore review their existing pension plans and, if necessary, talk to their advisor about alternative options.
Overall, the abolition of the LTA is a significant step towards improved mobility of pension assets and provides the opportunity to invest pension provision in other countries without having to worry about high taxation.