Fixed protection of Lifetime Allowance

heythrop

The deadline for the application of protection of the lifetime allowance is 5 April.

I am not quite sure what this means and the implications for me.

I am on an NHS pension scheme which provides a final salary pension. Does anyone know whether this scheme provides PRIMARY or ENHANCED protection? I am asking because it asks on the application form whether you have either.

I am 55 years old and due to retire in 10 years time. I plan to continue in that scheme. can I fix my LTA? My other question is: If I calculate my pension pot to be more than £1.5m when I retire, does this mean I would benefit from fixing my LTA?

Sorry if this sounds quite basic. Grateful for any advice.

Aegis

Essentially you should apply for fixed protection if BOTH of the following conditions are met:

• You will not be making any further contributions or accruing pension value above a relevant percentage (defined by HMRC as being CPI except in certain circumstances)
• Your pension value is likely to exceed £1.5 million at retirement, bearing in mind that the value of a defined benefit scheme is calculated as 20 times the scheme pension you take plus the value of the lump sum

If you're planning to continue being an active member, then you are ineligible for fixed protection, as you must not make any further contributions (beyond employer funding of a shortfall) once you have fixed protection in place.


Pensions schemes do not themselves offer enhanced or primary protection, these were available to apply for following 6 April 2006 where the pensions were hugely overhauled from the old system. If you have Enhanced protection then you should not have been making further contributions into your pension (i.e. including getting extra years service credited), while if you had Primary protection your pension value on 6 April 2006 would have to have been in excess of £1.5 million.


In short, unless you actually applied for one of those, you won't have either enhanced or primary protection.

heythrop

Thank you very much for this advice. This is most helpful.

Aegis

heythrop wrote: »

Thank you very much for this advice. This is most helpful.

Just to be pedantic, that was just generic information, not advice. Advice would need to be tailored to your personal circumstances following a review.

That might seem like a very petty distinction, but from my compliance department's perspective it's quite important that I mention it!

You're welcome in any case though

dunstonh

Just to be pedantic, that was just generic information, not advice. Advice would need to be tailored to your personal circumstances following a review.

That might seem like a very petty distinction, but from my compliance department's perspective it's quite important that I mention it!

My compliance say the same. Avoid the advice word and anyone seeming to take your discussions as advice needs to be told it is not advice.