News

Read the latest Taylor Patterson company news, or news relating to bespoke pension arrangements .

Latest News


It’s Live – Protection and the Lifetime Allowance (LTA)

The LTA has now been in existence for 10 years, having been introduced back in April 2006. Whilst there is no limit on the value of pension savings that can be built,  if it exceeds the LTA when the pension is taken the amount in excess of the LTA will be charged at 55 per cent if taken as a lump sum or 25 per cent if left in the fund.

The LTA has now reduced to £1m but you may have the opportunity to protect your pension fund at a higher allowance.

At various stages through this process, there has been the opportunity to protect against the falling LTA, these protections are detailed below:-

Enhanced Protection: Prior to 2006 if somebody applied for Enhanced Protection it meant that their fund would never be tested against the LTA however they had to immediately cease contributions

Primary Protection: Individuals who had more than £1.5m at 5 April 2006 were able to apply for Primary Protection which would protect their fund at whatever level it was as at 2006 and still allow them to contribute, which was beneficial if the fund fell in value. 

Fixed Protection 2012: Once the LTA had hit its high of £1.8m it then dropped back to £1.5m in 2012. Individuals were able to protect against this and protect their LTA at £1.8m providing they didn’t contribute again.

Fixed Protection 2014: This allowed individuals to protect against the Lifetime Allowance falling from £1.5m to £1.25m and allowed them to fix their LTA at £1.5m providing they didn’t contribute again.

As of the 28th July 2016, you can now apply for Individual Protection 2014, Individual Protection 2016 and Fixed Protection 2016 online at https://www.gov.uk/guidance/pension-schemes-protect-your-lifetime-allowance

  • For Individual Protection 2014: You must have a valuation conducted with a value of over £1.25m as at 5th April 2014. This does allow for future pension accrual but will protect the fund against charges to the lower of £1.5m or the value as at the 5th April 2014. You must apply before 5th April 2017.
  • Fixed Protection 2016: Protects a lifetime allowance of £1.25m as opposed to the new level of £1m. In order to qualify there must have been no pension accrual from 6th April 2016.
  • For Individual Protection 2016: You must have a valuation conducted with a value of over £1m as at 5th April 2016. This does allow for future pension accrual but will protect the fund against charges to the lower of £1.25m or the value as at 5th April 2016.

Please also remember that the lifetime allowance is set to increase by CPI with effect from April 2018.

For further information please contact your usual professional adviser or alternatively contact Ted Hulme on 01772 550786 or via email ted.hulme@tayapt.co.uk

Make an enquiry

Personal Details

Organisation Details