PATHways 185

Lifetime Allowance Abolition Regulations published

The expected Pensions (Abolition of Lifetime Allowance Charge etc) Regulations 2026 came into force on 25 June 2026. 

Unless stated otherwise, the changes to the legislation apply with retrospective effect from the beginning of the 2024/25 tax year and are intended to make relatively minor technical corrections relating to the abolition of the Lifetime Allowance (LTA). 

Amongst other things the amendments made by the Regulations include:

• When calculating a member’s crystallised pension rights for the purposes of the £30,000 trivial commutation limit, this no longer counts previously paid trivial commutation lump sums, short service refund lump sums or winding-up lump sums, amongst other lump sums. The amount of any previous transfers to a QROPS are also now brought into consideration for the total. These changes apply to trivial commutation lump sums paid on or after 29 June 2026, and, in effect, reflect the pre-abolition position that only benefit crystallisation events (BCEs) counted towards the limit.
• For members who had uncrystallised benefits on reaching age 75 between 6 April 2006 and 5 April 2024, the ‘disregard’ of the member’s lump sum allowance and lump sum and death benefit allowance used up by BCE 5, 5A or 5B will now be based on the percentage of the standard LTA used up at that time. This was previously the monetary amount of the BCE. 
• A new requirement for individuals who are issued with a transitional tax-free amount certificate and subsequently join a new scheme (or their personal representatives if they die after joining the new scheme) to provide the scheme administrator with a copy of the certificate within 90 days of the joining date, or before any relevant benefit crystallisation event occurs, if earlier. 
• For transfers to a registered pension scheme from 29 June 2026, if the member has a current or future right to a stand-alone lump sum, within three months of the date of the transfer the scheme administrator must provide the receiving scheme with the details of what the maximum lump sum would have been on 5 April 2023.

Consultation on statutory transfer conditions amendments

The Department for Work and Pensions (DWP) has published a consultation entitled Protecting Pension Savers - Proposals to Amend the Occupational and Personal Pension Schemes (Conditions for Transfers) Regulations 2021. The consultation, which closes on 21 July 2026, concerns draft amendments to the Regulations which determine how trustees must follow the statutory provisions for a member’s transfer request, and therefore obtain a statutory discharge from their liability to provide benefits to the member.

The key provisions that the DWP has proposed, which are subject to change, are:

• The First Condition, which allows for trustees to approve transfers to certain schemes such as authorised Master Trusts or public service schemes without carrying out the further due diligence checks covered by the regulations, will be expanded to apply to ‘reputable’ pension schemes. This term is not defined within the draft regulations, and the trustees’ decision that a scheme qualifies must be ‘on the balance of probabilities’. It is proposed that the final regulations will include a non-exhaustive list of factors that may be considered to help determine this. 
• The removal of the amber flag where the trustees decide that there are overseas investments included in the receiving scheme. This flag has caused a larger than perhaps anticipated number of referrals for members to MoneyHelper guidance due to the broad drafting within the Regulations. This may not have been in line with the policy intention so the flag is proposed to be removed.
• A red flag will apply where the trustees have asked for evidence that the member has an ‘employment link’ to a receiving occupational pension scheme, but the evidence does not demonstrate that link. The government has stated that this is specifically intended to address issues with small self-administered schemes (SSAS), which they perceive as a segment of the market exposing members to higher potential risk. 
• Members who have received MoneyHelper transfer guidance in the twelve months prior to a transfer request will not be required to do so a second time.