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Lifetime Allowance calculations applicable after 5 April 2016

Table detailing the various lifetime allowance protections.

Lifetime Allowance calculations applicable after 5 April 2016

When pension benefits are taken, a benefit crystallisation event (BCE) occurs and a test is carried out to determine whether the member has sufficient unused lifetime allowance. Part of this test involves revaluing any previously crystallised amounts in line with changes in the lifetime allowance since the previous BCE took place.

After each BCE, the pension scheme administrator will issue a statement confirming the percentage (%) of lifetime allowance used by that event.

The table below details the various lifetime allowance protections and shows an easy way to revalue previous benefit crystallisation events at the point further pension benefits are taken.

The table should be read in conjunction with our accompanying articles Lifetime Allowance calculations for different forms of protection and Tax-free cash under the life allowance rules.

Type of Protection

Personal Lifetime Allowance

Previous benefit crystallisation events value

Example

None

Standard lifetime allowance (currently £1,000,000)

Apply the % of lifetime allowance previously used to the Standard lifetime allowance (currently £1,000,000)

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Primary Protection

£1,800,000 + (£1,800,000 x Primary Protection factor)

Apply the % of lifetime allowance previously used to £1,500,000

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Enhanced LTA – Pension credit or international enhancement factors

SLTA + (LTA x enhancement factor) where:

SLTA is the standard lifetime allowance applicable at the point of the BCE

LTA is a value dependant on when the enhancement factor is given.  If it is given:

  • before 6 April 2012, LTA is £1.8 million;
  • between 6 April 2012 and 5 April 2014, LTA is £1.5 million;
  • between 6 April 2014 and 5 April 2016, LTA is £1.25 million;
  • after 6 April 2016, LTA is £1 million.

 

Apply the % of lifetime allowance previously used to the standard lifetime allowance (currently £1,000,000)

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Fixed Protection 2012

The greater of £1,800,000 or the standard lifetime allowance (currently £1,000,000)

Apply the % of lifetime allowance previously used to the greater of £1,800,000 or the standard lifetime allowance (currently (£1,000,000)

Click here

Fixed Protection 2014

The greater of £1,500,000 or the standard lifetime allowance (currently £1,000,000)

Apply the % of lifetime allowance previously used to the greater of £1,500,000 or the standard lifetime allowance (currently (£1,000,000)

Click here

Fixed Protection 2016

The greater of £1,250,000 or the standard lifetime allowance (currently £1,000,000)

Apply the % of lifetime allowance previously used to the greater of £1,250,000 or the standard lifetime allowance (currently (£1,000,000)

Click here

Individual Protection 2014

The greater of the value of the individual’s total pension savings on 05/04/2014 (capped at £1,500,000), or the standard lifetime allowance (currently £1,000,000)

Apply the % of lifetime allowance previously used to the greater of the Individual Protection lifetime allowance or the standard lifetime allowance (currently £1,000,000).

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Individual Protection 2016

The greater of the value of the individual’s total pension savings on 05/04/2016 (capped at £1,250,000), or the standard lifetime allowance (currently £1,000,000)

Apply the % of lifetime allowance previously used to the greater of the Individual Protection lifetime allowance or the standard lifetime allowance (currently £1,000,000).

Click here

Enhanced Protection

Lifetime allowance charge does not apply.

 Click here

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

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