Pensions minister: lifetime allowance is more than enough to retire on

The £1 million lifetime allowance (LTA) allows people to save four times what they need to reach an average retirement income, according to pensions minister Richard Harrington.

Since 2011 the LTA has fallen from £1.8 million to its current level of £1 million.

People who breach the £1 million limit over a lifetime face penalties of up to 55% when they receive their pension.

The policy, which collected HM Revenue & Customs (HMRC) £126 million for the 2015/16 tax tear according to a Financial Times report, has attracted criticism from many. Former pensions minister Ros Altmann is among those who have called for it to be scrapped.

However current pensions minister Harrington (pictured) has defended the LTA. He said the policy is part of the difficult choices the Treasury has to make.

‘At the end of the day the Treasury has got its own pressures,’ he told New Model Adviser®. ‘But what I would say is although the pot is only £1 million, that doesn’t mean you can only save £1 million, it just means that taxpayers won’t help you beyond that and governments have to make that kind of choice with everything.