Introduction

Individual protection allows savers to keep a higher, protected allowance based on the value of their pension savings when the lifetime allowance was reduced in both 2014 and 2016.

Advisers need to understand the extra protection offered by both version of individual protection and how they can form part of tax efficient planning for clients potentially impacted by the 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. Explain the limits to qualify for each form of individual protection
  2. Determine how to value different pension scheme benefits for the purpose of individual protection
  3. Discuss the factors which can lead to loss or reduction of individual protection and the process for reporting any change
Literature

Learning material

This module explains what the different versions of individual 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 Individual protection guide

Post learning assessment

Question 1

Which of the following clients would qualify for individual protection 2016?

  1. Tina, who had pension savings worth £864,000 on 5 April 2016 which are now valued at £1.1M
  2. Sebastien, who had pension savings worth £1.06M on 5 April 2016 which are now valued at £1.4M
  3. Adriano, who had pension savings worth £2M on 5 April 2016 and already holds primary protection
  4. Beatrice, who had pension savings worth £526,000 on 5 April 2016 which are now valued at £748,000

Question 2

When Clive was applying for individual protection 2014, he needed to include a value of benefits he had crystallised in June 2010 (when the LTA was £1.8M). If the amount he previously crystallised was £724,500 – what value should he have used for IP14?

  1. £724,500
  2. £503,125
  3. £603,750
  4. £869,400

Question 3

Which of these events would trigger the loss or recalculation of individual protection?

  1. Deducting a pension debit due to a pension sharing order
  2. Making a further contribution to a DC scheme after 5 April 2014 or 2016 (depending on version held)
  3. Having ‘benefit accrual’ in a DB scheme after 5 April 2014 or 2016 (depending on version held)
  4. Transferring from one DC pension scheme to another DC pension scheme

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.