United Kingdom

Transitional pension protection information delayed

November 2015


HM Revenue and Customs has admitted it cannot provide transitional pension protection details to those affected by the reduction in the lifetime allowance.

Currently, the lifetime allowance – the maximum amount individuals can add to their pensions over their lifetime before tax relief is reduced – is £1.25million, but from April 2016, the allowance will be cut to £1m. The excess over the Lifetime Allowance will be subject to a tax charge of up to 55 per cent when benefits are taken.

Since the announcement of the lifetime allowance reduction, government communications have indicated that further information about transitional protection would be provided, but the HMRC said on their website at the end of September, ‘we are not able to provide as much detail as we would have liked.’

Further details as well as legislation for the lifetime allowance reduction and the protection regimes 2016 will be available following the Finance Bill 2016, due to be published at the end of the year.

Scheme members will therefore not be able to apply for protection until after April 2016.

Paul Bloomfield, Business Development Director at Aon Employee Benefits said: “A delay adds an element of uncertainty for those planning to take action. The 5th April 2016 still however remains a key date for those intending to apply for fixed protection 2016 as accrual will need to cease from this date in order for it to be effective. We are continuing to work with our clients with this in mind and hope that the draft legislation due at the end of the year will provide us with more detail around process and timings.”



Aon UK Limited is authorised and regulated by the Financial Conduct Authority. Registered in England and Wales. Registered number: 00210725. Registered Office: The Aon Centre, The Leadenhall Building, 122 Leadenhall Street, London EC3V 4AN.