Pension Planning at Age 75: Key Decisions After the LTA Abolition

Age 75 has long been a significant milestone in UK pension planning. Under the Lifetime Allowance (LTA) rules that applied until April 2024, any uncrystallised pension funds or certain pension drawdown funds were tested against the LTA at age 75, with a tax charge of 55% (as a lump sum) or 25% (as income) on any excess. The abolition of the LTA from 6 April 2024 fundamentally changed what happens at 75 — but age 75 remains a meaningful planning point. This guide explains the current position for those approaching or passing this milestone.

Why Age 75 Still Matters

The Lifetime Allowance was abolished by the Finance (No.2) Act 2023, effective from 6 April 2024. Since that date, there is no annual or lifetime limit on the total tax-relieved pension savings an individual can hold, and no LTA test at age 75 (or at any other point).

However, age 75 remains relevant for several reasons:

1. The Lump Sum Allowance (LSA) and Lump Sum and Death Benefit Allowance (LSDBA) — the new limits introduced to replace the LTA — interact with crystallisation events at and around 75.
2. Death benefit treatment changes at 75 — the tax treatment of pension death benefits is different if the member was under or over 75 at the date of death.
3. Transitional tax-free cash protection — those with enhanced or primary LTA protection have specific considerations at 75.
4. Expression of wishes and trust planning — the age 75 point is a sensible trigger for reviewing beneficiary nominations and Lasting Powers of Attorney.

The New Allowances: LSA and LSDBA

Following LTA abolition, two new allowances limit the tax-free element of pension benefits:

Lump Sum Allowance (LSA): £268,275 This caps the total tax-free lump sums you can take across all your pensions during your lifetime (the Pension Commencement Lump Sum, plus certain small pot lump sums, certain trivial commutation lump sums, and stand-alone lump sums). It is not tested at a specific age — it applies whenever a tax-free lump sum is taken.

If you have already taken tax-free cash, the PCLS already drawn is counted against this £268,275 limit, so future tax-free lump sums are limited accordingly.

Lump Sum and Death Benefit Allowance (LSDBA): £1,073,100 This is a broader limit covering both lifetime lump sum benefits and lump sum death benefits paid to beneficiaries. It includes:

• All amounts counted within the LSA above
• Uncrystallised Funds Lump Sum Death Benefits (UFPLS on death before 75)
• Annuity protection lump sums
• Drawdown fund death benefit lump sums where the member died under 75

Benefits paid above the LSDBA are taxed at the recipient's marginal rate.

Neither the LSA nor the LSDBA is tested specifically at age 75 — they are running totals tracked over a lifetime. However, the death benefit treatment (described below) changes in a meaningful way at 75.

Death Benefits: The Age 75 Dividing Line

The most significant practical difference at age 75 is the tax treatment of pension death benefits paid to beneficiaries:

Death before age 75:

• An uncrystallised pension fund paid as a lump sum death benefit is free of income tax for the beneficiary (subject to the LSDBA).
• Inherited drawdown funds can also be taken tax-free.
• Annuity protection lump sums are paid tax-free (subject to LSDBA).

Death on or after age 75:

• All pension death benefits — whether paid as a lump sum or as inherited drawdown income — are taxed at the beneficiary's marginal income tax rate.
• There is no income-tax-free option.

This distinction creates a strong incentive to consider, before age 75, whether the pension fund or particular pension arrangements should be drawn down, converted, or otherwise restructured to maximise the tax-free potential for beneficiaries.

Strategic Considerations Approaching Age 75

Given the change in death benefit tax treatment at 75, members approaching that age should consider:

1. Drawing some of the pension fund pre-75 as tax-free cash If you have remaining LSA capacity (i.e., you have not yet taken the full £268,275 tax-free), you can crystallise some or all of your uncrystallised pension fund before you reach 75 and take the PCLS tax-free. Once past 75, any lump sums from the pension are taxable.

This is particularly relevant for members who have been in drawdown but have deferred their PCLS or who have uncrystallised pension pots they have not yet touched. Before 75, there is a window to crystallise and take the tax-free component.

2. Considering the inheritance tax position from April 2027 From 6 April 2027, unspent pension funds will be brought within the estate for UK Inheritance Tax purposes. This change was legislated in the Finance Act 2026 (which received Royal Assent on 18 March 2026), so the advantage of holding pension assets for IHT planning purposes will diminish significantly. This changes the calculus around whether to draw down pensions versus retaining them for beneficiaries — and age 75 may no longer be the sole planning milestone.

3. Reviewing beneficiary nominations Pension providers hold the assets under discretionary trust — the trustees have discretion over who receives death benefits, guided (but not bound) by your expression of wishes. Before age 75, any lump sum death benefit paid within the LSDBA is income-tax-free; post-75, it is taxed at the beneficiary's rate. Ensuring your expression of wishes directs the death benefit to the most tax-efficient beneficiary — for example, a lower-rate taxpayer spouse rather than a higher-rate taxpayer adult child — can meaningfully affect the net benefit received.

4. Reviewing protection certificates Members with transitional tax-free cash protection (from the LTA abolition transition) should confirm how their protection interacts with the LSA. Some individuals have protected tax-free cash entitlements above £268,275. These protections were preserved at LTA abolition and continue to apply, subject to the HMRC transitional guidance. If you held Enhanced Protection, Primary Protection, or Individual Protection (2014 or 2016), confirm with a financial adviser or HMRC whether your protection status remains valid and how it interacts with the new framework.

Crystallisation Events at 75: What Still Happens

Under the old LTA rules, uncrystallised pension funds were subject to a "BCE5B" (Benefit Crystallisation Event) at age 75. This event no longer triggers a tax test under the LTA-abolished regime. However, the following administrative events may still occur at or around 75:

• Pension providers may review their fund documentation to confirm the member has been enrolled in a drawdown arrangement where required.
• Annuity providers apply their standard pricing at the time of purchase; there is no change in annuity availability at 75, though rates improve with age due to shorter expected payment periods.
• HMRC's records of LTA protections and transitional protections remain relevant to calculating LSA and LSDBA capacity.

It is worth noting that you can still take money from your pension after 75 — there is no requirement to take the entire pension at this age. The continuation of drawdown post-75 is entirely permitted. The primary planning consideration is the death benefit tax change.

Lasting Powers of Attorney

One dimension of age 75 planning that often goes under-discussed is cognitive capacity. Pension management in drawdown requires ongoing decisions — fund selection, withdrawal amounts, tax management. As health issues become more common with advancing age, the ability to manage these decisions may diminish.

Registering a Lasting Power of Attorney (LPA) for property and financial affairs before capacity is lost is essential. Without an LPA, your family cannot manage your pension or financial affairs without applying to the Court of Protection — an expensive, time-consuming process. A registered LPA allows your appointed attorney to operate your pension accounts, make drawdown withdrawals, and take other financial decisions on your behalf if needed.

The LPA should be in place well before 75 — ideally at or before retirement — and should be updated if your circumstances or choice of attorney changes.

Compliance note: The Lifetime Allowance abolition took effect from 6 April 2024. The Lump Sum Allowance and Lump Sum and Death Benefit Allowance figures stated are correct as at June 2026 and are subject to further legislative change. The pension IHT changes from 6 April 2027 were legislated in the Finance Act 2026 (Royal Assent 18 March 2026); detailed implementation rules continue to be confirmed — check the current position before acting. This guide is for information only and does not constitute regulated financial or tax advice. Decisions around crystallisation, death benefit nominations, and LPA at age 75 carry material financial consequences and should be taken with the benefit of regulated specialist advice.

How Global Investments Can Help

Age 75 is one of the most important planning horizons in a retiree's financial life, particularly following the LTA abolition and the forthcoming pension IHT changes. Global Investments works with clients approaching 75 to review their uncrystallised pension funds, assess the optimal timing of crystallisation and PCLS, update beneficiary nominations, and ensure that Lasting Power of Attorney arrangements are in place. We also co-ordinate with estate planning specialists to address the post-2027 IHT landscape. Contact our team to discuss your age 75 pension review.