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Lifetime Allowance calculations applicable after 5 April 2014

Table detailing the various lifetime allowance protections.

Lifetime Allowance calculations applicable after 5 April 2014

When pension benefits are taken, a test is carried out to determine whether the member has sufficient unused lifetime allowance. There are now a variety of lifetime allowance protections that makes this test increasingly complex. This table details the various lifetime allowance protections. It also explains how to value previous benefit crystallisation events at the point further pension benefits are taken.

Type of Protection

Personal Lifetime Allowance

Previous benefit crystallisation events value

Example

None

£1.25 million

Apply the % figure of lifetime allowance previously used up to the current Standard Lifetime Allowance

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Primary Protection

£1.8 million + (£1.8 million x Primary Protection factor)

Apply the % figure of lifetime allowance previously used up to £1.5m

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Enhanced LTA – Pension credit or international enhancement factors

SLTA + (LTA x enhancement factor)
Where:
SLTA – is the standard LTA applicable at the point of the BCE
LTA – value depends on when enhancement factor is given. If before 6 April 2012 = £1.8 million between 6 April 2012 and 5 April 2014 = £1.5 million
After 5 April 2014 = £1.25 million

Apply the % figure of lifetime allowance previously used up to the current Standard Lifetime Allowance

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Fixed Protection 2012

£1.8 million

Apply the % figure of lifetime allowance previously used up to £1.8m. For post 5 April 2014 events use the percentage of the standard lifetime allowance or £1.8m, whichever is greater.

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Fixed Protection 2014

£1.5 million

Apply the % figure of lifetime allowance previously used up to £1.5m. For post 5 April 2014 events use the percentage of the standard lifetime allowance or £1.5m, whichever is greater.

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Individual Protection

Equivalent to total value of pension funds on 5 April 2014 capped at £1.5 million

Apply the % figure of lifetime allowance previously used up to the Individual Protection lifetime allowance. For post 5 April 2014 events use the percentage of the standard lifetime allowance or their personal lifetime allowance, whichever is greater.

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Enhanced Protection

Lifetime allowance charge does not apply.

 

For further information see our article 'Lifetime Allowance Calculations for different forms of protection'.

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