Home > News > 2012 > January 2012 > Barnett Waddingham Recommends Early Action to Guarantee Pensions Fixed Protection
Barnett Waddingham Recommends Early Action to Guarantee Pensions Fixed Protection
Barnett Waddingham, the UK’s largest independent firm of actuaries, administrators and consultants, is urging people with large pension savings to review their arrangements as soon as possible to avoid any complications in meeting HMRC’s Fixed Protection deadline of 6 April 2012.
The standard lifetime allowance (LTA) for defined benefit (DB) and defined contribution (DC) pensions is £1.8m for the 2011/12 tax year, but will reduce to £1.5m with effect from 6 April 2012. Individuals can, however, apply for Fixed Protection to maintain the higher amount. The main condition for Fixed Protection is to cease all further pension accrual and contributions.
Typical candidates who could benefit from Fixed Protection are those relatively close to retirement, or anyone who believes the HMRC’s value of their existing pension provision might exceed £1.5m at retirement.
Bhargaw Buddhdev, a partner at Barnett Waddingham who advises on pension arrangements for senior executives, says: “This is the last opportunity for high earners to protect the value of their pensions and prompt action is required to review arrangements and take any necessary action”.
Individuals who have already started drawing a pension, but have further benefits to bring into payment later, must not overlook the impact of the reduction in LTA on their remaining benefits.
Applications for Fixed Protection need to be made to HMRC using a specified application form. The form cannot be submitted online – it must be printed, completed and posted to HMRC and received by them before 5 April 2012. This makes early preparation critical.
Without Fixed Protection the maximum tax free cash would reduce from the current maximum of £450,000 to the new maximum of £375,000 and this means that it is important to consider the position carefully in order that a potentially valuable benefit is not lost.
If you would like more information please contact Steph Gold or Bhargaw Buddhdev.