Fixed Protection 2016 (FP2016) & Individual Protection 2016 (IP2016)

In the 2016 budget the new £1million Lifetime Allowance was confirmed, along with details of new transitional protections.  Fixed Protection 2016 (FP2016) and Individual Protection 2016 (IP2016) were designed to preserve a personal Lifetime Allowance (PLTA) of up to £1.25million dependent upon the value of all relevant benefits on 5th April 2016.

Individual Protection 2016 (IP2016)

Where an individual’s pension value is over £1million on 6th April 2016, they will be able to apply for this protection.  HMRC have put no time limit on when this application can be made.

Members of a defined benefit plan such as the NHS Scheme will continue to be able to accrue benefits without invalidating the protection.

Unlike previous forms of pension protections there is no deadline for submitting an application for IP2016 however it will ALWAYS be based on the value of your pension(s) as at the 5th April 2016.

Fixed Protection 2016 (FP2016

FP2016 is available to anyone who is a member of a registered pension scheme.  It protected a fixed LTA of £1.25million, subject to the following conditions:

  • You will be subject to restrictions on how and when you can transfer benefits
  • You can continue to accrue benefits within certain limits
  • You cannot start a new pension arrangement

If you break any of these conditions, you will lose Fixed Protection and revert to the standard LTA.

Both these forms of pension protection also have an inflation element built in, in that the value will be re-valued in line with the annual rate of inflation from 6th April 2018.

Inflation and Fixed/Individual Protection 2016

The Standard Lifetime Allowance (SLA) will be increased in line with Consumer Prices Index (CPI) increases from 6 April 2018. If the new level of SLA is not a multiple of £100 using the relevant CPI increase, it will be increased up to the next multiple of £100.

For example, previous CPI increases in 2018 and 2019 have already increased the SLA to £1,030,000 (06/04/2018) and £1,055,000 (06/04/2019). Any future increases effective from the 6th April will be determined by the rate of CPI in the preceding September. 

If at any time the SLA increases above the protected amount held under any of the fixed or individual protection options, the SLA will apply.