M&G Wealth: Abolition of Lifetime Allowance to fuel pension estates survey

by | Apr 25, 2023

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A survey by M&G Wealth on the abolition of the Lifetime Allowance (LTA) shows that most financial advisers and paraplanners believe more of their clients will use pension funding to pass wealth on to their dependants upon their death.

The LTA, previously standing at £1,073,100, was the maximum amount you can take out of your pension fund in your retirement without incurring an extra tax charge. In the recent budget the Government announced that it was abolishing the limit from April 2024.

Almost half of the record 1,800 attendees (852) participated in an online seminar poll, run by M&G Wealth’s Head of Technical Les Cameron.

90% either agreed or strongly agreed that the abolition of the LTA will mean more people using their pension to pass wealth to the next generation. 86% stated that the indication from the Labour Party that they would reinstate the LTA, if it formed the next UK Government, would not stop them recommending clients to resume pension funding if the LTA impacted them.

 
 

80% of those polled thought that the abolition of the LTA will incentivise further pension saving amongst clients previously affected by it. Over a quarter had at least 10% of their clients currently impacted by the LTA.

The full results of the survey are detailed below.

Les Cameron, Head of Technical at M&G Wealth, said:

 

“This is the highest ever turnout we have had for one of our ‘Techy Thursday’ webinars showing the significance of the impact the Chancellor’s LTA changes have had for advisers and their clients.

“It remains fundamental that people are incentivised to save for their retirement, but we need stability of the rules so advisers can plan effectively.”

M&G Wealth LTA poll full results

What percentage of your clients are impacted by the LTA? (601 responses)

 
ResponseOptionsCountPercentage
A0-5%19833%
B5-10%23739%
C10-20%11018%
DOver 20%569%

The abolition of the LTA will incentivise further pension saving among those previously affected by it? (700 responses)

ResponseOptionsCountPercentage
AStrongly Agree14921%
BAgree51159%
CNeither agree or disagree9013%
DDisagree456%
EStrongly disagree51%

The abolition of the LTA will mean more people using pensions to pass wealth to the next generation (604 responses)

 
ResponseOptionsCountPercentage
AStrongly agree16527%
BAgree38163%
CNeither agree nor disagree559%
DDisagree3<1%
EStrongly disagree00%

Will Labour’s pledge stop you from recommending to clients that they resume their pension funding if they are at or near the LTA? (576 responses)

ResponseOptionsCountPercentage
AYes8214%
BNo49486%

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