retirement

Fixed Protection Lifetime Pension Allowance 2012

On 6 April 2012 the lifetime allowance (the maximum you can accrue in total in your pension funds) throughout your lifetime will be reduced from £1.8m to £1.5m. 

Pension Fund Already Exceeds Lifetime Allowance - If you have a pension fund larger than £1.5m you may face a tax charge on the day you retire on or after 6 April 2012.

Transition Enhannced and Primary Protection (2006) - Some people may have already protected their large pension fund benefits before 2006 by using Enhanced or Primary Protection.  If this is the case, you are unaffected

Fixed Protection from 2012 - If your pension fund is already over £1.5m ... do you qualify for fixed protection.

Who qualifies for protection?

• Your pension funds are worth more than £1.5m in total after 5 April 2012 and
• You have stopped accruing further pension rights after 5 April 2012
• You do not already have enhanced or primary protection for larger pension rights

How do I apply for fixed protection?

• Download application online, print, complete and post to HMRC - application will be available in 2011
  

Latest date for application for fixed protection

• 5 April 2012

Can I still make pension contributions if I have registered for fixed protection?

• No, you can longer make contributions to a money purchase (investment linked) pension schemes although you may continue to pay into a final salary or salary related pension provided your "benefits" entitlement do not increase (this of course may be a risky practice).

Can I transfer pensions and keep fixed protection?

• Yes, provided it is:
• An investment linked money purchase scheme transfer to another investment linked money purchase scheme
• A pension credit transfer on divorce

Transferring pensions and losing fixed protection

• You may lose fixed protection by doing the wrong type of pension transfer such as from a money purchase pension to a cash balance arrangement or a defined benefits arrangement. 
  
• You may also lose fixed protection if you transfer from a cash balance or defined benefits arrangement to another cash balance or defined benefits arrangement if the transfer was not because your pension scheme was being wound up or you employer has the business and your pension is being transferred as part of a wider movement to any new employer scheme.
  
  

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