Detailed guide: Pension schemes: protect your lifetime allowance

The standard lifetime allowance was reduced to:

• £1.25 million on 6 April 2014
• £1 million on 6 April 2016

But you may be able to protect your pension(s) from these reductions.

There are 3 protections you can apply for.

Protection	What it does	Can I keep building up my pension(s)?
Individual protection 2016	Protects your lifetime allowance to the lower of: – the value of your pension(s) at 5 April 2016 – £1.25 million	Yes. But you must pay tax on money taken from your pension(s) that exceed your protected lifetime allowance.
Fixed protection 2016	Fixes your lifetime allowance at £1.25 million.	No, except in limited circumstances. If you do, you’ll: – lose your fixed protection 2016 – pay tax on any pension(s) above the standard lifetime allowance when you take your pension
Individual protection 2014	Protects your lifetime allowance to the lower of: – the value of your pension(s) at 5 April 2014 – £1.5 million	Yes. But you must pay tax on money taken from your pension(s) that exceed your protected lifetime allowance.

Individual protection 2016

You can apply if your pension(s) were worth more than £1 million at 5 April 2016.

You can still apply if you already have:

• enhanced protection
• fixed protection
• fixed protection 2014
• fixed protection 2016

Individual protection 2016 will stay dormant until you lose or give up your previous protection – tell HMRC in writing if this happens.

If you applied for protection from the 2016 reduction and received a temporary reference number, you must apply online for a permanent reference number.

You can’t apply if you have either:

• primary protection
• individual protection 2014

Check if there are any current problems with the service, or times it won’t be available.

Before you start

You’ll need:

• an account for HMRC online services – you can set one up when you start your application
• to know what your pension(s) were worth on 5 April 2016 and a breakdown of the amount

If you don’t know this information, you can ask your pension scheme administrator. If you’ve more than one scheme, add the amounts from each scheme together.

Fixed protection 2016

Apply if:

• you or your employer haven’t added to your pension since 5 April 2016
• you opted out of any workplace schemes by 5 April 2016

You can still apply if you already have:

• individual protection 2014 (fixed protection 2016 will be dormant until you lose your previous protection – you should tell HMRC in writing

You can’t apply if you have:

• enhanced protection
• primary protection
• fixed protection
• fixed protection 2014

If you applied for protection from the 2016 reduction and received a temporary reference number, you must apply online for a permanent reference number.

Check if there are any current problems with the service, or times it won’t be available.

Before you start

You’ll need an account for HMRC online services – you can set one up when you start your application.

Individual protection 2014

You can apply if your pension(s) were worth more than £1.25 million at 5 April 2014. You must apply before 5 April 2017.

You can still apply if you already have:

• enhanced protection
• fixed protection
• fixed protection 2014
• fixed protection 2016

If you have fixed protection 2016, it will become dormant and individual protection 2014 will be opened. For all other protections, individual protection 2014 will stay dormant until you lose or give up your previous protection – tell HMRC in writing if this happens.

You can’t apply if you have primary protection.

Check if there are any current problems with the service, or times it won’t be available.

Before you start

You’ll need:

• an account for HMRC online services – you can set one up when you start your application
• to know what your pension(s) were worth on 5 April 2014 and a breakdown of the amount

If you don’t know this information, you can ask your pension scheme administrator. If you have more than one scheme, add the amounts from each scheme together.

Report a change

Changes in your pension can affect if you can keep your individual protection for 2014 and 2016. You should tell HMRC if:

• the amount of your pension breakdown changes
• you need to add or change a pension debit because you receive a discharge notice as a result of a pension sharing order – within 60 days

If you have protected your pension savings online you will be able to amend your protections yourself, for example if you made mistakes with the values when you applied or if you have pension debits which affect the amount you are protected by.

You should make these amendments by logging into your personal tax account and selecting the ‘pensions’ option.

If you did not protect your pension savings online, you should tell HMRC in writing about these changes and HMRC will write to you to let you know how it affects your protection.

If you have lost protection

If you have lost your protection you need to tell HMRC in writing. We will need:

• full name, address and national insurance number
• the exact date that you lost protection
• reason why you lost protection – benefit accrual, auto enrolment etc.
• type of pension arrangement (defined contribution or defined benefit)
• your original certificate (if you still have it – although these weren’t issued for IP2016/FP2016)

If you have a paper certificate, you should send this with the information needed to us by post.

If you applied for IP2016 or FP2016 and don’t have a certificate, this information can be provided by email.