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The Complications of Simplification

Calculating Previously Drawn Benefits

As the pensions industry enters yet another round of protection, the problems of multiple pension regimes is beginning to really rear its ugly head again. We have made reference in the past to our historic three Occupational Pension Regimes and how benefits were then calculated differently. Remember Pre 87, 87 – 89 and Post 89? Déjà vu for those that were around. All of that seems easy compared to what we are heading for now. 

Moving on to more recent developments, an anomaly that effectively allowed those with Primary Protection more lifetime allowance headroom has been closed.  This issue surrounded the revaluation of previous benefits taken.  At present, when the standard lifetime allowance reduces, it reduces the value of those previous benefits compared to the overall total personal lifetime allowance calculated for the primary protection certificate. 

The introduction by HMRC of the limit of £1.5 million for this calculation closes this anomaly. 

This is likely to be referred to as Capped Current Standard Lifetime Allowance. 


Pension Commencement Lump Sum and the Lifetime Allowance

Much of this was spoken about in the run up to 2012 when those with Enhanced or Primary Protection without any Tax Free Cash Protection saw their lump sums reduced, as per the below: 


Lifetime Allowance


Prior to April 12

£1.8 million


Post April 12-14

£1.5 million


Post April 14 if uncorrected

£1.25 million


*PCLS (Pension Commencement Lump Sum) 

Those, therefore in the post April 2014 position, providing their Enhanced or Primary Protection is still in force, will see the PCLS held at £375,000. 

Those without protection will suffer the reduction with a maximum PCLS amount of £312,500, 25% of £1.25 million.


These calculations can be complicated, please speak to Kerry Houghton at Taylor Patterson for further guidance on 01772 550614 or e-mail

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