LTA Protection Flashcards
Types of Protection - can protection be lost if transfer from DB to DC takes place
PRIMARY PROTECTION - No
ENHANCED PROTECTION- Yes
If value of members benefits if no longer active at 5/4/06 have increased by more than 5% per annum when BCE or when transfer occurs if enhanced or over appropriate limit
DC schemes if relevant benefit accrual occurs
FIXED PROTECTION 2012,14 and 16 - Yes
If a new pension arrangement is established other than for a pension transfer or any benefit accrual takes place easy for DC schemes
for DB schemes tested annually
INDIVIDUAL PROTECTION 2014,16 - No
NO PIPs!
LEVEL OF LTA PROTECTION PROVIDED
PRIMARY and ENHANCED
PRIMARY PROTECTION
PP Factor issued with Certificate based on percentage benefits were over £1.5m and applied to underpinned £1.8m
Can still make contributions so not usually possible to lose but can be reduced with a pension debit
ENHANCED PROTECTION
A client who maintains EP will never occur an LTA charge.
No LTA Charge even if BCEs go over LTA
Possible to lose if contributions paid after 6th Apr 2006
LEVEL OF LTA PROTECTION PROVIDED
FIXED and INDIVIDUAL
FIXED PROTECTION
Provides client with fixed personal LTA
FP 2012 - LTA up to £1.8m no contributions past 6th Apr 2012
FP 2014 - LTA up to £1.5m no contributions past 6th Apr 2014
FP 2016 - LTA up to £1.25m no contributions past 6th Apr 2016
INDIVIDUAL PROTECTION
Provides client with a specific personal LTA can be lost if pension debit applied and members can continue contributions
IP2014 - Amount equal to pension benefits as at 5th Apr 2014 must be between £1.25 and £1.5m
IP2016 - Amount equal to pension benefit at 5th Apr 2016 between £1m and £1.25m
IMPACT on PCLS
PRIMARY PROTECTION
PP in respect of PCLS applied when member applied for Primary Protection and had lump sum rights at 5th Apr 2006 that exceeded £375k.
Underpinned £1.8m applies so maximum PCLS is lump sum rights at 5/4/06 x £1.8/£1.5m
ENHANCED PROTECTION
Also only available if lump sum rights at 5/4/06 exceeded £375k
Lump Sum Protection is noted as a percentage on Certificate
FIXED PROTECTION 2012,14 and 16
PCLS not specifically protected but will be lesser of 25% of Protection held and value of benefits when crystallised. If Standard LTA increases then so will PCLS
INDIVIDUAL PROTECTION 2014,16
PCLS will be lesser of 25% of personal LTA or value of benefits being crystallised and again if Standard LTA increases then so will PCLS
ELIGIBILITY for FP and IP2016
No cut off date for either
IP2016 if members pension benefits were over £1m as at 5/4/2016
Establishing this requires Scheme Administrator to provide valuation as at 5/4/2016
