As of 12 August 2013, pension savers with large retirement pots can apply for fixed protection 2014 to preserve their lifetime allowance at the current level of £1.5m.
HMRC’s website now offers the following resources:
- a tool for checking whether a pension saver needs to apply for fixed protection 2014 (and also individual protection 2014);
- an online application form;
- a paper application form (for savers who do not have a National Insurance number); and
- updated guidance.
As a first step, savers need to find out the value of their pension savings, to determine whether they should apply for fixed protection 2014. They should talk to their scheme administrator or financial adviser and they could make use of HMRC’s lifetime allowance tool.
Members that wish to apply for this protection will have to supply basic personal information such as their name, date of birth and NI number, together with declarations that they do not have Primary Protection and that Enhanced Protection/Fixed Protection 2012 will not apply for them on or after 6 April 2014. Applications for Fixed Protection 2014 will need to be made before 6 April 2014 to prevent savers’ lifetime allowance being cut to £1.25m. If HMRC accepts the application, it will send the member a certificate.
This process is detailed in the Registered Pension Schemes and Relieved Non-UK Pension Schemes (Lifetime Allowance Transitional Protection) (Notification) Regulations 2013, which came into force on 12 August 2013.
The Registered Pension Schemes and Relieved Non-UK Pension Schemes (Lifetime Allowance Transitional Protection) (Amendment) Regulations 2013, which also came into force on 12 August 2013, introduces easements to mitigate the risk of members in receipt of defined benefits losing the protection offered by Fixed Protection 2012 through no fault of their own.