You are right to an extent and yes, for incomes greater than the income limit of £25,400 the higher age-related allowance is gradually being removed. When the majority of people reading this will be drawing benefits, I imagine that the allowance will be long gone. Most people want to retire sooner than 65 so I had in mind, two types of people when I was writing that.
Primarily, someone (nominally a wife) who had no personal pension provision and where just a little may have helped. A lot of the upper limits of the age aspects of the allowances wouldn't apply, let alone the nominal amount which might apply (to 'her') at say, 55 if she wanted to cut down her hours of work and (maybe) £400 per month may have helped her do that.
Secondly, many people retiring want to retire before 65, when the age related allowances would kick in anyway (if it hadn't been chopped), and don't forget (I'm sure you know) you can take pension income and still work. There are so many variables and so many computations though, that yes, your scenario does currently apply to some (in particular, you!). As ever though, there is only so much space and an individual might be taxed on income that is derived from more than just pensions.
Last edited by Al R; 14th Aug 2012 at 14:07.