Pension Planning – Changes to the Lifetime Allowance


There has been a lot of coverage recently in the press over the forthcoming changes to the lifetime allowance for pension saving.  In summary, from 6 April 2012 the lifetime allowance will reduce from its current level of £1.8m to £1.5m.


As part of the changes HMRC have introduced a form of protection, known as Fixed Protection, which individuals can apply for.  Fixed Protection must be applied for before 06 April 2012 and essentially ‘fixes’ the lifetime allowance at its current rate of £1.8m.


However, in order to keep Fixed Protection in place very strict criteria must be adhered to, such as ceasing payments to private pension schemes and testing regularly against growth limits for members of schemes where continuing contributions are permissible.  Also an application for Fixed Protection involves revoking Enhanced Protection, if in place. Enhanced Protection is very often a better form of protection particularly for GPs.


Applications for Fixed Protection and its implications must be considered very carefully.  In particular the revocation of Enhanced Protection can have drastic effects for GPs.


For those individuals currently in the NHS Pension Scheme the decision as to whether or not to apply for Fixed Protection is complex and it is essential that you discuss your personal circumstances with an independent financial advisor who has detailed specialist knowledge of the NHS scheme.


Unfortunately we have seen recent examples of inappropriate advice being given by non-specialist IFAs to doctors.


For further information please contact 01772 821021.


Moore and Smalley are registered to carry on audit work by the Institute of Chartered Accountants in England and Wales and authorised and regulated by the Financial Conduct Authority.