The proceeds of your account will not normally be subject to inheritance tax. This is because Smart Retire is written under a pension trust and the money in your account does not form part of your estate. Find out more about inheritance tax.

If your Smart Retire account started before 6 April 2024 the amount of lifetime allowance used by your account will be expressed as a percentage of the standard lifetime allowance. It is shown in your account details.

If you are taking benefits from other pension schemes you might be required to notify the administrator of the total percentages of standard lifetime you have used in this and other pension schemes.

If you start taking flexible benefits from a pension scheme the amount you can continue to contribute to a pension scheme and receive tax relief is reduced to £10,000 a year. This is known as the Money Purchase Annual Allowance (MPAA).

If you exceed this allowance, you will be required to pay a charge to reverse the tax relief you received when paying the contribution. Unused allowance from previous year cannot be used to increase the money purchase annual allowance.

Claiming your benefits through Smart Retire means the money purchase annual allowance applies.

Find out more about the MPAA.

If your contributions exceed the annual allowance you will be required to pay a charge to reverse the tax relief you received when paying the contribution.

Find out more about the annual allowance.

The annual allowance is a limit on the amount that can be contributed to your pension each year, while still receiving tax relief. It's based on your earnings for the year and is capped at £60,000.

There are some schemes in place to protect people who exceeded, or were expected to exceed, the lifetime allowance before it was introduced or before it was reduced. Individuals with lifetime allowance protection usually retain their right to a higher level of tax-free lump sum, and to higher tax-free parts of other lump sums and lump sum death benefits. You should seek independent financial advice if you think this applies to you. Find out more about the lifetime allowance.

The lifetime allowance was abolished from 6 April 2024. It was the limit on the amount of your pension savings you could take – whether as lump sums or retirement income – without triggering an extra tax charge.

These new allowances have been introduced from 6 April 2024 to limit the total amount of tax-free sums that members can receive from their pension savings.

Lump sum allowance – this is £268,275 and it covers the pension commencement lump sum, and the tax-free portion of uncrystallised funds pension lump sum.

Lump sum and death benefit allowance – this is £1,073,100 and covers all the lump sums under the lump sum allowance and certain death benefits and other lump sums that are payable tax-free (such as serious ill-health lump sums).

If your Smart Retire account started on or after 6 April 2024 the amount of lump sum allowance used by your account will be expressed as a monetary amount. It is shown in your account details. The same amount of your lump sum and death benefit has been used by your account.

If you are taking benefits from other pension schemes you might be required to notify the administrator of the total amount of the lump sum allowance and/or lump sum and death benefit allowance you have used in this and other pension schemes.

If the total amount of tax-free sums, that you receive during your lifetime across all of your pension savings, is above the lump sum allowance, any excess is subject to income tax based on your personal circumstances.

If you die before age 75, and the the total amount of tax-free payments across all of your pension savings is above the lump sum and death benefit allowance, any excess is subject to income tax, at the rate applicable to the circumstances of the recipient(s) of the payment from your account.