When the Chancellor announced last year that lifetime limits on pension tax relief were to be abolished, many pension savers were delighted. No longer did they need to worry about the risk of going over the lifetime allowance (LTA) and incurring a tax charge on any pensions taken above that level. However, as with so many Budget announcements, there was a catch in the small print. Although the lifetime allowance was going, a new limit was created for the amount of tax-free cash that you can take out. Given that the LTA was previously set at £1,073,100, and that you can generally take 25pc of your pension as tax-free cash, the new lifetime limit – known as the lump sum allowance or LSA – is 25pc of the old cap or £268,275. It will still be possible to take lump sums above this amount, but anything above it will be treated as taxable income. For those who have yet to take their first pension, the system will be relatively simple. From now on, when you take a pension and take some tax-free cash, your pension scheme or provider will set out in writing how much of your LSA you have used...