LTA is product of politicians meddling for the sake of it

As well as introducing the LTA, simplification also saw the introduction of the annual allowance. People questioned the need for an annual allowance alongside the LTA, but as the initial AA was £215,000 and it rose by 2010 to £255,000 this was not a big issue.

Then in 2012 a change of politicians meant a change in pension rules, with the LTA cut to £1.5m and the AA being slashed to just £50,000 – but with new carry-forward rules that got some people back to £250,000 by closing pension input periods early. It is difficult to believe that simplification could have spawned anything as complex and confusing as PIPs.

And then in 2014 the annual allowance was slashed again by 20 per cent to just £40,000 and the LTA by 17 per cent, to £1.25m. And, again, in 2016, although the AA will remain untouched, the LTA will be reduced to £1m – political meddling at its worst.

The introduction of the LTA brought with it a series of protections, and these have now grown and flourished.

Primary protection protects those who already had more than £1.5m before April 2006. A personal LTA was protected with rises in line with the LTA, but higher growth and further ‘accrual’ are both subject to LTA tax charges. An option for some was enhanced protection – effectively opting out of the new rules – with whatever you already had protected, providing you did not benefit from further pension accrual. You could take enhanced protection with less than £1.5m and could give it up if you did not achieve the hoped-for growth.

Fixed protection was effective from April 2012 and fixed your LTA at £1.8m. Like enhanced protection you could take fixed protection with less than £1.8m and could give it up if you did not achieve the hoped-for growth.

Fixed protection 2014 was effective from April 2014 and fixed your LTA at £1.5m. Like enhanced and fixed protection you could take fixed protection 2014 with less than £1.5m and could give it up if you did not achieve the hoped-for growth.

Individual protection is available for those who had more than £1.25m at 6 April 2014. This protects any amount between £1.25m and £1.5m, but future growth and further accrual are both subject to LTA tax charges. Individual protection will remain available up to 5 April 2017.

Fixed protection 2016 will be available to protect people with funds below £1.25m and individual protection 2016 will be available to protect those with funds between £1m and £1.25m.

After several years of politicians using pensions as a political football, a pension specialist has been appointed as pensions minister