Savers “left in the dark” by HM Revenue & Custom’s failure to publish any information on how to apply for lifetime allowance protection are set to be enlightened on 15 February.
From 6 April the lifetime allowance will reduce to £1m from £1.25m - a move announced by chancellor George Osborne in last year’s Budget.
With just weeks to go until the lifetime allowance is slashed and advisers still needing more detail about how they can apply to protect their clients savings pots, Financial Adviser contacted HM Revenue & Customs to ask for clarity.
A spokesman for HMRC said: “The government confirmed at Summer Budget 2015 that the lifetime allowance would be reduced to £1m from 6 April 2016 and transitional protection would be available.
“Alongside the draft Finance Bill a draft explanatory note and Tax Information and Impact Note set out that the new protections, fixed protection 2016 and individual protection 2016 would be similar to fixed protection 2014 and individual protection 2014.
“More detail will be provided in the week beginning 15 February when we will also publish pro forma letters that can be used for both Fixed Protection 2016 and Individual Protection 2016 interim applications.”
In its latest Pension Schemes Newsletter HMRC said members would not be able to apply for individual protection or fixed protection until 6 April.
Andrew Pennie, head of pathways at Glasgow-based Intelligent Pensions, said: “With less than 10 weeks to go to the end of the tax year, we are still in the dark as to exactly how applying for protection, against the reduced lifetime allowance, will work in practice.
“HMRC has confirmed it will not process any protections before 6 April, but with the clock ticking down, we really need more information to help employers and trustees prepare for this change.
“We know HMRC will launch an online system in July to allow people to apply for protection. An interim process will be available from the 6 April which must be completed in writing.
“However, there is currently no guidance about what information or requests must be provided and because HMRC will not process anything before April, anyone who might be affected and looking to take their benefits in April and May will likely face complications and delays.”
HMRC has said that because applications must provide certain values as at 5 April 2016 relating to their pension savings or declare they don’t hold other protections before 6 April 2016 then any applications submitted before the latter date will not be retained.
