Doctors, senior police officers, headteachers and other older workers contributing to ‘final salary’ pension schemes are in danger of incurring 55% tax charges on their pension funds, warns the Financial Times.
Because the rules say your final pension is equivalent to a lump sum of 20 times that amount, many are in danger of breaching the new ‘lifetime allowance’ for the value of pension funds of £1.25 million that applies from April 2014. People in this position need to get advice on the two forms of ‘protection’ which can limit any tax charge.