UK Pension Guide: Allowances & Scam Safety

Essential limits for the 2024/25 tax year and the 4 steps to protect your future.

Part 1: Lifetime Tax-Free Limits

These limits cap the total tax-free money you can take from your pensions over your entire lifetime, applying both during life and upon death (before age 75).

LSA vs. LSDBA Composition

The Lump Sum Allowance (LSA) represents the maximum tax-free cash (PCLS) you can take, which is a key portion of the total Lump Sum & Death Benefit Allowance (LSDBA).

Key Lifetime Figures

£268,275 Standard Lump Sum Allowance (LSA)

Maximum tax-free cash (PCLS) you can take in your lifetime.

£1,073,100 Lump Sum & Death Benefit Allowance (LSDBA)

Maximum tax-free amount for all benefits taken over your life.

Part 2: Annual Contribution Limits

The Annual Allowance (AA) limits the amount contributed to your pension each year without triggering a tax charge.

Allowance Comparison

This chart shows how severely the allowance is reduced when the MPAA or Tapered rules apply.

Bar chart comparing the Standard Annual Allowance against the minimum reduced allowances.

Key Annual Figures

£60,000 Standard Annual Allowance

The standard limit for pension contributions per year.

£10,000 MPAA / Tapered Annual Allowance (Min)

The reduced limits that apply if you flexibly access benefits or are a high earner.

Triggers for Reduced Allowances

Tapered Annual Allowance Trigger

The allowance may be reduced if:

  • Your taxable income (excl. pension) exceeds **£200,000**, AND
  • Your taxable income (incl. pension) exceeds **£260,000**.

If both apply, your allowance reduces by £1 for every £2 over £260,000, down to a minimum of £10,000.

Money Purchase Annual Allowance (MPAA) Trigger

This £10,000 limit is triggered when you take a taxable payment from your pension plan, such as:

  • Taking income from a **flexi-access drawdown** plan.
  • Taking an **Uncrystallised Funds Pension Lump Sum (UFPLS)**.

Important: Taking only your tax-free lump sum does not trigger the MPAA.

Part 3: Staying Scam Safe (4-Step Checklist)

Protect your future by using the Pension Scams Action Group (PSAG) checklist before making any decisions about your pension funds.

4 Steps to Stay Scam Safe

1

Is the offer unexpected?

Be wary of unsolicited calls, free reviews, or promises of high, guaranteed returns.

2

Checked who you're dealing with?

Verify the firm on the **FCA Financial Services Register**. Watch out for 'clone firms'.

3

Are you being rushed?

Pressure to act quickly ("you will miss out") is a major warning sign. Take your time.

4

Seek impartial advice?

Get free, impartial guidance from **MoneyHelper**, or consult an FCA-regulated adviser.

Part 4: Useful Resources & Contacts

  • MoneyHelper: Free, impartial advice to help you manage your money.
  • The Pensions Advisory Service: Offers free information and guidance on all pension matters.
  • Pension Tracing Service (gov.uk): Helps you locate lost pension funds.
  • HM Revenue and Customs (HMRC): Official source for tax information.
  • Report Scams: Contact **Action Fraud** immediately if you suspect a scam.
  • Financial Conduct Authority (FCA): Check their website for scam warnings and use the Financial Services Register.

This guide is for informational purposes only. All limits and charges relate to the 2024/25 tax year. We strongly recommend seeking professional financial advice.