Individual protection 2016
This allows an individual whose pension rights are valued over £1 million to protect those rights, subject to an overall maximum of £1.25 million.
What is individual protection 2016?
Individual protection was introduced to give individuals a personal lifetime allowance equal to the value of their pension funds at 5 April 2016 and £1.25 million.
When could you apply for individual protection 2016?
An individual who, on 6 April 2016, did not have primary protection or individual protection 2014 and whose benefits in registered pension schemes had a total value of more than £1 million, can register for individual protection 2016 (IP2016). This enables them to have a personal lifetime allowance of the lower of that value and £1.25 million rather than accept the reduction of the standard lifetime allowance to £1 million from £1.25 million with effect from 6 April 2016 and continue to have benefit accrual in their schemes.
The only time limit on applying for individual protection 2016 is that it must be in place before the individual wants to take benefits.
Benefit accrual includes personal and employer contributions to money purchase schemes such as SIPPs and SSASs and benefit accrual in defined benefit or cash balance schemes.
Individual protection 2016 cannot normally be given up or lost. However, if, at any time after HMRC have issued an individual with an individual protection 2016 reference number, their pension rights are subject to a pension debit as a result of a pension sharing order on divorce, they must inform HMRC about this within 60 days of the pension debit as this will reduce or revoke their individual protection 2016.
If, in future, the standard lifetime allowance increases to more than an individual’s individual protection 2016, it will cease and be replaced with the higher standard lifetime allowance.
How do you apply for individual protection 2016?
Individuals will need to know the value of their pension entitlements as at 5 April 2016.
It will not be lost if further savings are made to the pension scheme. The only way in which individual protection 2016 could potentially be lost is on divorce.
To register for this protection individuals will need to open an account for HMRC online services.
Can you hold other protections with individual protection 2016?
Individuals will be able to hold individual protection 2016 along with:
Individuals will not be able to hold individual protection 2016 along with:
If any of these protections are held with individual protection, then individual protection 2016 will remain dormant unless the other protection is lost.