8. Transitional Reliefs and Protected PCLS

Question 1

What is Primary Protection?
Who was it for?
How were their benefits valued?
How is primary protection factor calculated
How is tax-free lump sum protected under Primary Protection?

Answer 1

For those with pension valued > £1.5M at A Day
DB - 20 * value of pension (25 * if already in payment) + PCLS + MPP Pot
Primary Protection Factor = (Above values MINUS £1.5M) / £1.5M (rounded up to 2 decimal places)
Factor later applied to £1.8M (value at 06/04/2012)
Tax-free lump sum protected at 25% of £1.5M

Question 2

What is Enhanced Protection - who is it for?

Answer 2

Those who were not going to contribute to pension (could not have been active member of pension) scheme at 05/04/2006
Open to anyone, even if under LTA at time

Question 3

What are fixed protections? What were the respective protected LTA’s
What conditions were attached

Answer 3

Fixed 2012 - for those who had accrued or expected to accrue pension rights > £1.5M. Set at £1.8M (PCLS 25% of that)
Fixed 2014 - for those who had accrued or expected to accrue pension rights > £1.5M. Set at £1.5M (PCLS 25% of that)
Fixed 2012 - for those who had accrued or expected to accrue pension rights > £1.25M. Set at £1.25M (PCLS 25% of that)
Conditions attached - no further contributions (except life assurance premiums); no new schemes may be started, other than transfer of existing pension rights

Question 4

What are individual protections?

Who is it open to?

Answer 4

Open to anyone who does not have primary protection. Open to those with enhanced / fixed and those will take precedence
Individual Protection 2014 (those with pension > £1.25M). Set at value at that date
Individual Protection 2016 (those who had pension > £1M)