Primary Protection Print
Primary Protection was available where an individual had pension rights valued in excess of £1.5 million as at 6 April 2006. This was the date on which the new simplified pension rules came into force, and is known as, and referred to hereinafter as “A-Day”. The individual could register that value as his/her personal lifetime allowance (“PLTA”). Values that were registered would then be expressed as a percentage of the statutory lifetime allowance (£1.5 million at A-Day). For example, for someone who had a fund of £2.25 million at A-Day, the percentage will be 150. By expressing the A-Day value in percentage terms, the value is automatically indexed in line with the indexation of the lifetime allowance. When the pension crystallises the individual can take benefits, in this example up to 150 per cent of the value of the statutory lifetime allowance in the year the benefits are taken, without incurring any additional tax liability.
Where Primary Protection applies, then the lifetime allowance is not reduced below the £1.8m which applied from April 2011, so further protection has been given to those individuals who elected for Primary Protection.