Fixed Protection 2012 (FP2012)– Now Closed

This was announced by the Treasury in December 2009 and stated that from 6th April 2012 the lifetime allowance, the total value  you were allowed to have in all your pension pots, was reduced from £1.8m to £1.5 million.

The Government had realised that there were people who had built up more than this new level and so were offered a ‘lifeline’. If you had already built up pension savings of more than £1.5 million there was a new form of protection called Fixed Protection 2012 (FP2012).

FP2012 allowed you to ‘ring fence’ your pot value up to £1.8 million without paying the lifetime allowance charge, although the ability to accrue future benefits was very limited.

There were already two others forms of protection in place, Primary Protection and Enhanced Protection, if you already had either of these then you couldn’t apply for FP2012. It was possible to revoke enhanced protection and apply for fixed protection however, Primary Protection could not be revoked. Therefore, Fixed Protection was not available for those with existing Primary Protection.

This protection can still be held and used however, it may impact upon your ability to hold the other forms of pension protection.

What are the rules?

If you wanted to apply for and keep FP2012 then you have met and continue to must meet certain conditions. These were and are that:

  • An application was received and set up by HMRC by 5th April 2012
  • Providing they ceased accruing benefits in all registered pension schemes before 6th April 2012

Then to keep FP2012 you:

  • For members of the NHS Scheme, this means there cannot be benefit accrual higher than inflation as measured by CPI (the Consumer Price Index). This is the rate at which the amount pension you had accrued at the 5th April 2012 can increase by each year
  • Cannot start a new arrangement under a registered pension scheme other than to accept a transfer of existing pension rights
  • You will be subject to restrictions on where and how you can transfer benefits to another scheme

If you break one of these conditions then you will lose your FP2012. If you do you MUST inform HMRC that you have lost FP2012 and you have ONLY 90 days from an event leading to the loss of FP2012 to do this. If you don’t, then you will be liable to penalties of up to £300 for failure to notify and daily penalties of up to £60 per day thereafter.

As with most rules governing how you deal with the revenue (HMRC), it is your responsibility to communicate with them. You cannot say ‘they didn’t tell me’ -this reason is no longer valid or allowable.

Once your application was accepted by HMRC, they sent you a certificate with your unique reference number and stating that you were entitled to FP2012. It is really important that you keep this certificate safe.