The Lifetime Allowance

The Lifetime Allowance (LTA) is the total amount that you can build up in pension savings without incurring an additional tax charge.

Protecting your Lifetime Allowance

The Lifetime Allowance is normally tested at the point at which you take your benefits. If you are over the Lifetime Allowance, then a tax charge of up to 55% may be payable unless steps are taken to help mitigate your position. Whether you’re in the middle of your working life or nearing retirement, it is crucial that you know your proximity to the Lifetime Allowance.

1. Fixed Protection 2016 (FP2016)

If you took out Fixed Protection 2016 then your Lifetime Allowance is fixed at £1.25 million. You can apply for Fixed Protection 2016 as long as you do not already have Enhanced Protection, Primary Protection, Fixed Protection 2012 or Fixed Protection 2014.

For Fixed Protection 2016 to remain valid you must not have had pension benefit accrual after 5th April 2016. Benefit accrual includes:
• Any contribution paid to a defined contribution pension scheme e.g. AVCs, FSAVCs, Personal Pensions and SIPPs.
• Growth in defined benefit pensions (e.g. NHS Pension) that exceeds a relevant percentage.

2. Individual Protection 2016 (IP2016)

You can apply for Individual Protection 2016 as long as you do not have Primary Protection and the value of all of your pension benefits was over £1 million as at 5th April 2016.

You can continue to contribute and build up further pension benefits without the risk of losing this protection. You will have an individual allowance equal to the value of your benefits at 5th April 2016, but subject to a maximum of £1.25 million.

Warning: is your protection still valid?

In the past it has been possible for those nearer to retirement to apply for different forms of protection. However, please be aware that many individuals have secured and then lost their protection. Paying into a personal pension or AVC, for example, will have invalidated any form of Fixed Protection previously secured.

There are steps that you can take to mitigate the impact of these changes. If you think that you are likely to be affected then please get in touch.

For more help and guidance, please email

Pensions & Retirement

We believe that everyone should have a plan that delivers the income necessary for a comfortable life in retirement. With frequent changes to pensions legislation, it is more important than ever to get expert advice.

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