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Suppose you had a £3.3m pension pot — twice the current lifetime allowance of £1.65m. Your personal allowance would be fixed at twice the lifetime limit, whatever that may become.

When the lifetime allowance rose in line with inflation, the chances were you could keep the growth in your pension outside the tax net by investing in instruments such as index-linked gilts.

Now that the allowance is frozen, however, savers will find that more of their pension pot falls out of protection.

Enhanced protection safeguards an entire pension fund from tax, but to qualify for this you can’t have added to your fund since April 6, 2006 — and cannot make future contributions.

Crystallise benefits

If future investment growth alone will push you over the lifetime allowance, you could consider drawing some of your benefits early — provided there is no penalty for doing so.

Benefits can be taken any time between age 50 and 75 until April 5 2010, after which the minimum age will rise to 55. A tax-free lump sum of up to 25% can be withdrawn — £810,000 on a fund of £1.8m.

Time pension contributions

If you are in danger of breaching the lifetime limit, you could stop paying into your pension and switch into a cash fund — in the hope that the government will increase the allowance from 2016.

Redirect pension payments

Think about redirecting pension payments to your spouse or children, said Patrick Haines at adviser Cavanagh. If they have no earnings, though, the amount you can save in their name is limited to £3,600 a year — a net £2,880 pension payment, as you still get tax relief at 20%.

You could also redirect money into other tax-efficient investments such as tax-free Isas and venture capital trusts.

Take the tax hit

Longer-term investors might want to deliberately exceed the lifetime allowance and pay a 55% tax charge on the excess as this could produce a better return than investing in an equivalent mutual fund.

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