The freeze on the lifetime annual allowance (LTA) at £1,073,100 until 2026 is expected to result in more individuals facing charges for exceeding this limit. For clients with benefits in multiple pension schemes, particularly those with both defined benefit and defined contribution pensions, a crucial decision must be made. The order in which they crystallise each scheme can impact the amount tested against the LTA, determine which scheme incurs the charge, and influence how the charge is paid. This discussion explores the key considerations when deciding whether the defined benefit (DB) or defined contribution (DC) pension should bear the cost.
Click here to read the article written by David Downie, technical manager, Abrdn.
