Protecting your pension lifetime allowance


From 6 April 2014 the pensions’ lifetime allowance will be reduced to £1.25 million from the present level of £1.5 million. If you have already built up pension savings of more than £1.25 million or have planned to do so in the expectation that the lifetime allowance would not reduce from the 2013-14 level, there is a new form of protection called “Fixed Protection 2014” (FP2014).

The legislation for FP2014 applies from 6 April 2014 and broadly follows that for the existing fixed protection which was introduced when the lifetime allowance was reduced from £1.8 million to £1.5 million in 2012-13.

If you expect your pension savings to be more than £1.25 million (including taking into account past benefits crystallised) when you come to take any benefits on or after 6 April 2014 you can use FP2014 to help reduce or mitigate the lifetime allowance charge. FP2014 will allow you to crystallise benefits worth up to £1.5 million without paying the lifetime allowance charge, although the ability to accrue future benefits is very limited.

The application form for FP2014 is available since 12 August 2013 and must be submitted electronically or in paper form by 5 April 2014. However, HMRC will not send out any FP2014 certificates before November 2013.

We will be happy to speak with any pension savers who may be affected: those who have, or intend to have, pension savings in excess of £1.25m.


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