Industry experts have stressed the need for Labour to commit to completing the lifetime allowance (LTA) legislation if elected, amid concerns that any re-introduction of the LTA would cause an "incredible amount" of disruption and confusion.

The Finance Act 2024 previously delivered an amended pensions tax regime, effective from 6 April 2024, in which the LTA on most pension and lump sum benefits was replaced by two new allowances on most lump sum benefits.

However, industry experts warned at the time that this was a "rushed job with errors and omissions coming to light, resulting in HMRC having to now engage in a patch and mend job through regulations that are promised".

And while HMRC had confirmed plans to share further technical changes through a second set of regulations "shortly", news of a summer election has thrown these plans into limbo.

Reports have also suggested that Labour remains committed to re-introducing a lifetime allowance, prompting further concerns from industry experts.

The Investing and Savings Alliance (TISA) head of retirement, Renny Biggins, said that, "due to the nature of this wide-ranging and complicated set of changes, combined with the surprise timing of the forthcoming general election, there are still several scenarios in which consumers may face a penalty when trying to access their pension pots".

“Amending legislation is still required post-election to avoid these situations, which may require consumers to place their retirement plans on hold for an indefinite period. This must be addressed as a priority," he stated.

“It has been recently reported that Labour remains committed to reintroducing a Lifetime Allowance. Any introduction of a new LTA would cause an incredible amount of disruption and confusion for everyone.

“A new LTA would require another set of transitioning rules for those who have already acted based on the existing legislation. As we have seen with the LTA abolition this would not only be a lengthy piece of work to undertake but would also add yet another level of complexity.”

Biggins also argued that it would be beneficial to include any consideration of any further changes to allowances within the remit of Labour’s planned review of the pensions landscape, and consider the implications, limitations and opportunities for the pension regime more holistically.

“We believe this should be undertaken in full collaboration with industry, to ensure the framework is delivering fair outcomes for all and futureproofs it from further short-term interventions and changes, which undermine consumer trust, engagement and investment,” he said.

“We are very much looking forward to working with whichever party that forms a government post-election to ensure consumers receive a dignified and well-funded retirement.”

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