The ‘lifetime allowance’ is the maximum amount of value that you can accrue within your pension schemes without suffering an additional tax charge on extraction. The lifetime allowance for a partner’s pension pot from all pension sources (excluding state pensions) is currently £1.8m, but this is being reduced to £1.5m on 6 April 2012.

However, an election opportunity exists for you to keep the lifetime allowance on your funds at £1.8m. Time is running out though as the election has to have been received by HM Revenue & Customs by 5 April 2012. HMRC is surprised at how few elections it has received so far.

A consequence of making the election is that you are then unable to make any further contributions into your pension scheme.

The fast-approaching deadline means that if you have a substantial pension pot, you should consider now whether to elect to retain the £1.8m limit to protect any current value over £1.5million or to allow for future growth to take the fund over £1.5m without adverse tax consequence.

Louis Baker is head of the professional practices group at Crowe Clark Whitehill