Transitional protection – individual protection 2016
This is available for those with pensions worth at least £1 on 5 April 2016 who do not hold primary protection. There is no deadline for applying for individual protection 2016.
Regardless of when individual protection 2016 is obtained, it is effective from 6 April 2016. Again this means scheme administrators may have to recalculate benefits taken between 6 April 2016 and the date on which individual protection 2016 is subsequently obtained.
Those with individual protection 2016 will have a personal lifetime allowance based on the value of their pensions as at 5 April 2016, capped at £1.25m. The total pension values on 5 April 2016 will be calculated as shown in Box 1.
Those who have had a benefit crystallisation event (BCE) while holding fixed protection 2012 will have a BCE certificate based on a percentage of the £1.8m fixed protection lifetime allowance, those who had a BCE while holding fixed protection 2014 will have a BCE certificate based on a percentage of £1.5m, and those who have had a BCE while holding individual protection 2014 will have a BCE certificate based on a percentage of their personal lifetime allowance.
It is possible to hold individual protection 2016 as well as enhanced protection, fixed protection 2012/2014/2016, and individual protection 2014. In these circumstances the higher relevant level of protection will take precedence and individual protection 2016 will be dormant.
Danny Cox is a chartered financial planner at Hargreaves Lansdown