However, they will use up lifetime allowance, if the member has a Benefit Crystallisation Event (BCE) on or after 6 April 2006.

The test of how much lifetime allowance such pre 6 April 2006 pensions or annuities in payment use up, must take place just before the first post 5 April 2006 BCE is tested.


The value of a pre 6 April 2006 pension/annuity in payment is calculated as 25 times the pension/annuity in payment at the time of the test. If the pension in payment is a flexi-access drawdown pension that had previously been a capped drawdown pension, its value will be calculated as 25 times 80% of the maximum rate of capped drawdown pension that could have been paid in the year it ceased to be a capped drawdown pension.


  • In the tax year 2019/20, a member of a SIPP with £500,000 of uncrystallised funds decides to crystallise £400,000 of those funds in order to take benefits.
  • The member has no lifetime allowance protection, so will be subject to the standard lifetime allowance for that tax year of £1.055 million.
  • The member also has a pre 6 April 2006 annuity in payment of £20,000 p.a., so this will have a value of £500,000 (25 x £20,000), which will use up 47.39% of the standard lifetime allowance.
  • The member will then have 52.61% of the standard lifetime allowance left for the BCE of £400,000, which will use up 37.91% of the standard lifetime allowance.
  • This leaves the member with 14.7% of the standard lifetime allowance for any future BCEs. 

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