The experts are warning that 360,000 people could face a tax bill of as much as £137,500 if they don't act fast to protect themselves. The deadline to take action is looming, and those who fail to respond in time will face tax at an extraordinary 55%.
So who will be affected, and what can you do?
The problem here is that the government has changed the cap on the total you are allowed to invest in a pension during your lifetime. At the moment you can save £1.5 million, but as of 6 April this year, that will fall to £1.25 million.
Who is affected?
This seems like such a huge amount of money that ordinary people don't need to worry, but Standard Life is warning that the change will hit 360,000 people - including many who had no idea it would affect them.
Those who don't take any action and have more than £1.25 million in their pension pot at retirement (and less than the old limit of £1.5 million) will be taxed at 55% on the extra £250,000 – leading to an unexpected tax bill of up to £137,500.
As a rough rule of thumb Standard Life has calculated that if you have £700,000 in pension pots, or a final salary pension and an income of £60,000, you could be at risk of breaching the limit.
What can you do?It is stressing that if you are projected to have more than £1.25 million in your pension by retirement, you have an opportunity to protect yourself from a tax bill if you act fast.
Your first step should be to track down all the information you need to understand your position - which is going to take time. You need to contact the providers of all the pensions that you hold - including any current or former employers and the providers of any private pensions. You need to ask the current value and the growth projection. This will take time.
Alistair Hardie, head of customer consolidation at Standard Life, warns: "If they don't have online access to that information and have many different plans, it may take even longer. They might have to find all the paperwork, request an information pack from each pension scheme provider to work out their cumulative total, and then calculate their investment growth. They may also need advice to see if they are at risk of breaching the limit."
"It might take somebody weeks, if not months, to gather all the documentation required to work out their total pension value, particularly if they have many different pots. Pensions savers who might be affected need to make sure they don't miss any of their pensions out and need to start things moving now."
He says that you should aim to have all this in place by the end of February, so you have the chance to make the right decision about what to do next.
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Your optionsIf you have less than £1.25 million in your pension, but you are projected to have more than this by retirement, you can opt for 'fixed protection'. This means you can lock in the £1.5 million allowance but you will have to stop contributing to pension schemes (although there are a very small number of exceptions).
If you already have more than the £1.25 million cap you can opt for 'individual protection', which lets you keep contributing to your pension.
For some people, after weighing everything up, there best option will be to continue paying into their pension and accepting that they will have to pay the tax.
Working out what is best for you is not straightforward, and the experts recommend you talk to a financial adviser about what is right for you. They add that the end of the tax year is a hugely busy time for advisers, so it's worth getting a meeting in your diary, so you don't accidentally drift past the deadline.