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One of the main changes introduced by the act was a change in the taxation of UK Pensions from April 6 , 2006 . Prior to the change many different taxation regimes applied to pension schemes depening of exactly what type of scheme it was. After the changes a single taxation regime was designed.

The principle of the new regime is that a pension fund will be tax-free provided it is below the Life Time Allowance (which was set at £1.5m for the year from April 6 , 2006 ). A second restriction was imposed limiting the maximum annual contribution into a pension scheme.

Whilst the new regime is simpler the need to provide transitional arrangement for pension scheme members whose existing entitlements exceed the new limits has resulted in the actual implementation being extremely complex.


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