In the Budget on 8 July 2015 the Chancellor of the Exchequer confirmed that, as previously announced, the lifetime allowance for pension savings will be reduced from £1.25 million to £1 million from 6 April 2016. The lifetime allowance will also be indexed annually in line with the Consumer Prices Index from 6 April 2018.
Legislation for both the reduction in the LTA and the protection regimes (fixed protection 2016 (FP2016) and individual protection 2016 (IP2016)) will be delivered in Finance Bill 2016. As a result it will not be possible for scheme members to apply for protection until after April 2016.
The application process for FP2016 and IP12016 will be online and will require the member (or their authorised representative) to provide similar information and declarations as for FP2014 and IP2014. The online system will provide a response to the notification along with a protection reference number. The member will need to provide this protection reference number to their pension scheme in order to take their benefits using a protected LTA.
For these protection regimes, no certificate will be issued.
HMRC hope to be able to provide much more detail on this process both for members and scheme administrators in October 2015.
We have produced a bulletin in respect of the Lifetime Allowance and this can be found below:
Understanding Pensions and Tax - Lifetime Allowance (February 2016)
All benefit calculations are tested against the standard lifetime allowance (currently £1.25m, reducing to £1m in 2016 / 2017) for taxation purposes.
If you hold any form of protection against the standard lifetime allowance (Such as IP14, for example), please provide us with a copy of your certificate from Her Majesty's Revenue & Customs (HMRC).
Similarly, if you have lost any previous protection, please let us see evidence of this.