Individuals pay ten times more in tax for breaching the Lifetime Allowance.
The tax collected from individuals breaching the Lifetime Allowance (the amount of savings which can be built up in a pension and receive tax relief) has rocketed by £100m since it was introduced in 2006, with the latest figures showing that £110m in tax was collected from individuals exceeding the allowance during 2016/17, compared with less than £10m in 2006/7 when the Lifetime Allowance (LTA) was introduced.
For example*, if someone aged 45 has a pension fund of £400,000 and a salary of £50,000, saves 5% of their salary into their pension which rises by 3% p.a and receives employer contributions of 10%, rising by 3% p.a., it is possible for their pension fund to reach £1,670,000 by the time they retire at 65. By this time the LTA is expected to be valued at £1,690,000, showing they are not that far from breaching the limit.
Further coverage was gained in the Mirror, Money Observer, msn.com, The Times (1), The Times (2) and Your Money.