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What is the lump sum allowance?

Know your tax-free cash limit

If the value of your pensions is close to £1,073,100, or likely to reach this by the time you retire, then you need to know about the lump sum allowance (LSA). This limits the amount of tax-free cash you can take from the value of all your pension arrangements, including:

  • final salary/career average (defined benefit) schemes
  • personal pensions (also known as defined contribution pensions)
  • any pension that has paid you a lump sum or income.

It doesn’t include the State Pension.

The LSA is one of three allowances that were brought in on 6 April 2024 to replace the lifetime allowance (LTA). The other two are the lump sum death benefit allowance (LSDBA), which affects the beneficiaries of someone who dies before the age of 75; and the overseas transfer allowance (OTA), which affects those who want to transfer their pension overseas.

How much is my lump sum allowance?

For most people, the standard starting LSA is £268,275. This is the limit of the tax-free money you can take from your pension savings in total - whether that’s as a single tax-free lump sum or spread across several withdrawals, each with a tax-free portion. The figure is based on 25% of the old standard lifetime allowance.

If the total value of all your pension savings is under £1,073,100, the LSA is unlikely to affect you.

What if I had a protected lifetime allowance?
What if I’ve already started taking my pension savings?

Pension calculators

Our calculators can help you understand how much income you might have when you begin to access your pension.


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Understand how much tax you might have to pay on the money you take from your pension and how it could affect your future retirement income.


Flexible income calculator

This tool helps you understand how much flexible retirement income (income drawdown) you could take and how long your pension might last if you do so.