If individuals have pension savings (DB and DC schemes) of more than £1.25 million, as at 5 April 2014, IP 2014 will allow them to protect those savings (up to a value of £1.5 million), as long as they don’t have ‘primary protection’.
IP 2014 will therefore give individuals a protected lifetime allowance equal to the value of their pension savings on 5 April 2014 subject to an overall maximum of £1.5 million. Unlike FP 2014 there are no restrictions on future pension savings, although if they exceed your protected lifetime allowance the excess will be subject to the lifetime allowance charge.
This is a ‘buy while stocks last’ opportunity to get protection against the LTA up to £1.5m.
There is a deadline of 5 April 2017 to submit IP14 online applications to HMRC.
This can be done here.
Who can have IP14?
If you are a member of a registered pension scheme (including a deferred member) and/or a relieved member of a relieved non-UK pension scheme you can have IP 2014, provided that on 5 April 2014, your pension rights in such schemes are valued at more than £1.25m and
• you did not have valid primary protection on 5 April 2014 and
• your application for IP 2014 is received by HMRC by 5 April 2017 at the latest.
This communication is for informational purposes only and is not intended to constitute, and should not be construed as, investment advice, investment recommendations or investment research. You should seek advice from a professional adviser before embarking on any financial planning activity. Whilst every effort has been made to ensure the information contained in this communication is correct, we are not responsible for any errors or omissions.
The defined benefit scheme – whereby the employer promises the employee a specified payment upon retirement, the amount of which is calculated based on several factors including the years the contributor has been in the scheme, their age, and their salary at retirement – is no longer viable in today’s world.