Securing your personal lifetime pension allowance
Following the reduction of the lifetime allowance from £1.5m to £1.25m, anyone with total pension savings in excess of £1.25m as at 5 April 2014 has until 5 April 2017 to elect for individual protection 2014 to secure their personal lifetime allowance.
Securing individual protection 2014 will give the individual a personal lifetime allowance equal to their fund value at 5 April 2014, subject to a maximum of £1.5m.
Unlike fixed protection 2014, which closed to applications on 5 April 2014, further contributions will be permitted. Individual protection 2014 could, therefore, be appropriate to those who decided to remain active members of final salary schemes or who continue to receive contributions to money purchase arrangements.
An individual protection 2014 application can be made alongside some existing forms of protection including enhanced protection, fixed protection 2012 and 2014. However, those with primary protection or enhanced protection with (dormant) primary cannot apply.
The application for individual protection 2014 can be complex, particularly for those with multiple pensions or those who have staggered drawing their benefits over time, as the value of all plans at 5 April 2014 must be calculated in a prescribed manner.
Pensions savers are encouraged to seek early advice on this issue.
We have taken great care to ensure the accuracy of this newsletter. However, the newsletter is written in general terms and you are strongly recommended to seek specific advice before taking any action based on the information it contains. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. © Smith & Williamson Holdings Limited 2014. code: 14/989 expiry: 28/02/15
