Individual Protection 2014 (IP14)

Over the past few years we have seen reductions to the lifetime allowance for pension savings, and a number of protections have been made available to protect your benefits.  The latest protection to be made available is the Individual Protection 2014, which also goes by the acronym of IP14.

 

So, what is IP14?

From 6 April 2014 the lifetime allowance for pension savings reduced from £1.5m to £1.25m.  IP14 is available to anyone whose total pension savings at 5 April 2014 were £1.25m or above and will give you a protected lifetime allowance equal to the value of your savings subject to a maximum of £1.5m.  This means that for anyone with pension savings of £1.5m and above, an additional £250k of this will be protected from tax charges with IP14 with a potential tax saving of £62,500.

 

How do I apply for IP14?

IP14 is available to apply for online from 18 August 2014, and you have until 5 April 2017 to make your application. Full guidance notes can be found through HMRC’s website at:

 

http://www.hmrc.gov.uk/pensionschemes/ip14online.htm.

 

For those who have Primary Protection in place, IP14 will not be available; however you are able to apply for IP14 if you hold Enhanced Protection, Fixed Protection 2012 or Fixed Protection 2014.  Indeed, IP14 may provide fall-back protection should any of these existing protections fail for whatever reason.  It may therefore act as a valuable safeguard.

 

Can I make further pension savings with IP14?

Yes.  Unlike some other forms of pension protection, IP14 will not be lost if you continue to save into your pension scheme. Bear in mind, however, that any pension savings made above the protected lifetime allowance will be subject to the lifetime allowance charge.

 

What action do I need to take?

In order to apply for IP14, you will need valuations of your pensions as at 5 April 2014. These can be requested from your pension scheme; however, for GPs in the NHS scheme a valuation at 5 April 2014 will only be available from May 2016 onwards.

 

How can we help?

Should you feel you may benefit from IP14, Moore and Smalley can help with the process and can provide an estimate of your pension valuation at 5 April 2014 well before you will be able to obtain the actual figures from the NHS Pensions Agency.  Please contact David Walker or Andrew Purcell on 01235 404404 or Lisa Pennington on 0115 9721050 for further details.