Deadline for Primary and Enhanced Protection approaches

In 2006, Pensions Simplification introduced transitional arrangements for members with large pension funds to protect them against the Lifetime Allowance (LTA) limits.

Anyone with a fund approaching or over ?1.5m in April 2006 has the opportunity to register for either primary or enhanced protection (or both), but this window closes in April 2009.

Primary protection rules allow members to protect, at least to some extent, pension rights valued at more than ?1.5m as at 5 April 2006.

This effectively gives them a personal LTA which is bigger than that applying to those without protection.

Enhanced protection gives full protection against any future LTA charge, although broadly means that no further contributions can be made.

In the event that they are, members can revert to primary protection, if they have also applied for this.

Andrew Tully, Senior Pensions Technical Manager, Standard Life commented: "Pension scheme members with large fund values only have until 5th April 2009 to register for either 'primary' or 'enhanced' protection, after which, the opportunity will be lost.

While either form of protection will only affect a small number of individuals, the impact of the tax charge could be very significant.

Advisers should consider any of their clients with large funds (whether consolidated or not) who may benefit from such protection but have not yet registered.

Advisers should also be thinking about the impact of personal accounts in 2012 and the effects of auto-enrolment.

People could lose their enhanced protection if they are inadvertently auto-enrolled in their company pension scheme." Standard Life has produced comprehensive briefing cards on both types of protection, and they can be accessed at www.adviserzone.com/techzone.

Advisers can also use this site to download lists of their clients with large pension funds with Standard Life, using the Bulk Data Download facility.

Back to top