Introduction

To help shelter existing pension savings from the full impact of reductions to the lifetime allowances, three different versions of fixed protection were introduced. These allowed individuals to retain the higher, pre-reduction LTA level, but only if certain conditions are met.

Advisers need to know about the different versions of fixed protection, the benefit they give clients, the version that can still be applied for, and an understanding of the impact of losing protection for clients with savings near or above the standard LTA.

This module should take around 30 minutes to complete. Once you have completed all the sections there is a short self-assessment quiz to check what you have learned and a CPD certificate for up to 30 minutes can be claimed.

Outcomes

On completion of this module you should be able to:

  1. Describe the level of extra protection offered, the eligibility criteria, and relevant dates that apply to current and historic versions
  2. Explain how to apply for fixed protection and what information needs to be provided when taking benefits
  3. Describe the situations which may result in a loss of fixed protection
Literature

Learning material

This module explains what the different versions of fixed protection offer, the criteria to be met to keep a higher allowance and what actions can result in protection being lost.

CPD minutes: 30

Read the Fixed protection guide

Post learning assessment

Question 1

To qualify for and maintain any version of fixed protection which one of the following statements is true?

  1. The minimum fund required to qualify for fixed protection is £1M
  2. When taking benefits from a scheme, the whole of that scheme must be crystallised at the same time
  3. Third party contributions can be made without breaking protection
  4. Employers with qualifying workplace pensions don't have to enrol individuals they know (or believe) have fixed protection

Question 2

Which of the following statements is INCORRECT about the processes for applying for the various forms of fixed protection?

  1. Applications for fixed protection 2016 had to be made by 5 April 2016
  2. Applications for fixed protection 2012 had to be made by 5 April 2012
  3. Applications for fixed protection 2016 can still be made
  4. Applications for fixed protection 2014 had to be made by 5 April 2014

Question 3

Which of these clients has NOT had ‘benefit accrual’, so will keep their fixed protection?

  1. David – an active member of a DB scheme with 3.5% increased value of the benefits compared to a CPI increase of 2.5%
  2. Sally – who has been auto-enrolled into her company’s workplace scheme and is contributing 5% of her salary
  3. Victor - who continues to pay in £15 per month to a personal pension started in 2001, only to cover the included life cover
  4. Penelope – a deferred member of a cash balance scheme, where the value of the benefits increased by 8% compared to an annual rate in the scheme rules of 6%

Check your answers

Claim your certificate







Any reference to legislation and tax is based on our understanding of United Kingdom law and HM Revenue & Customs practice at the date of production. These may be subject to change in the future. Tax rates and reliefs may be altered. The value of tax reliefs to the investor depends on their financial circumstances. No guarantees are given regarding the effectiveness of any arrangements entered into on the basis of these comments.