Pension scheme members had up to 5 April 2009 to register, and those who did received a certificate.
From 2012/13 the PCLS for those with enhanced protection is limited to 25 per cent of maximum of either 25 per cent of £1.5mn, or the standard lifetime allowance, whichever is higher.
It was also possible to hold enhanced protection with lump sum protection if the individual’s lump sum pension rights were more than £375,000 at 5 April 2006.
The lump sum rights are expressed as a percentage of the certificate. The member is entitled to that percentage of their fund as a PCLS regardless of the size of fund they are crystallising. The percentage can be more or less than 25 per cent.
Vahey said: "Enhanced protection is normally lost if there is ‘relevant benefit accrual’, broadly if the member builds up benefits either in their defined benefit scheme or by contributing to a defined contribution scheme.
"It is also lost if certain types of pension transfers are received or made, or if the member becomes a member of a new pension arrangement (unless it’s a transfer of their existing rights)."
Fixed protection:
There are three forms of fixed protection, each introduced when there was a cut to the standard lifetime allowance. All the fixed protections operate in the same way, but they give different levels of protection.
There was no requirement for a minimum fund size at any particular date, but the protection is lost if there is any benefit accrual or if any contributions are made after the application deadline (or after 5 April 2016 for fixed protection 2016).
There is no separate PCLS protection available with any of the fixed protections. The maximum PCLS available will always be 25 per cent of the protected amount.
HMRC issued certificates to those who have been granted fixed protection 2012 or fixed protection 2014. Applications for fixed protection 2016 were still open – but these may have been closed on 15 March 2023, Vahey warned.
| Level of protection | Max PCLS | Application deadline | |
| Fixed protection 2012 | £1.8mn | £450,000 | 5 April 2012 |
| Fixed protection 2014 | £1.5mn | £375,000 | 5 April 2014 |
| Fixed protection 2016 | £1.25mn | £312,500 | None |
Source: HMRC/AJ Bell
Fixed protection is normally lost if the member either builds up benefits in their defined benefit scheme or contributes to a defined contribution scheme.
It is also lost if certain types of pension transfers are received or made, or if the member becomes a member of a new pension arrangement (unless it’s a transfer of their existing rights).
Complexity remains
However, Nigel Green, chief executive of the deVere Group, agreed that while scrapping the LTA would incentivise people to save for their retirement, "which must be championed", it has created further complexity.
He said: "Detail has served only to make an already highly complex regime even more so, meaning those wishing to take advantage of this new development should seek advice in the first instance.”
