PTM176100 - Lump sum allowance and lump sum and death benefit allowance: Protections: Overview
Types of protection
Divorce and international
Relying on protection
Pension sharing - impact on protection
Pension credits and allowance enhancements
Prior to 6 April 2024 individuals could apply for certain protections. If you are looking for more deatils on protections pre-April 2024 then please see the National Archive.
From 6 April 2024 an individual with valid protections is entitled to have their lump sum allowance (PTM171000) and their lump sum and death benefit allowance (PTM172000) protected.
Types of protection
Protections increase an individual's available lump sum allowance above £268,275 and lump sum and death benefit allowance above £1,073,100. There are a number of different forms of protections which might apply, which are set out below.
Primary Protection (PP)
Primary protection is for individuals who had pension savings of over £1.5 million on 5 April 2006. Primary protection cannot be given up and can only be reduced or lost through pension sharing on divorce.
For more information see PTM176210.
Enhanced Protection (EP)
Enhanced protection could be applied for by individuals with pension and/or lump sum rights in a tax-privileged scheme or contract, including those with pension rights of less than £1.5 million, onthe5 April 2006.
Those who applied and were issued a valid enhanced protection certificate prior to15 March 2023 cannot lose their enhanced protection. Those who applied on or after 15 March 2023 and were subsequently issued a valid enhanced protection certificate, can in some circumstances lose their protection.
For more information see PTM176310.
Fixed Protection (FP 2012)
Fixed protection 2012 could be appliedfor by individuals who had pension savings of more than £1.5 million onthe5 April 2012.
Those who applied and were issued a valid FP 2012 certificate prior to 5 March 2023 cannot lose their enhanced protection. Those who applied on or after 15 March 2023 and were subsequently issued a valid enhanced protection certificate, can in some circumstances lose their protection.
For more information see PTM176410.
Fixed Protection 2014 (FP 2014)
Fixed protection 2014 could be applied for by individuals who had pension savings of more than £1.25 million on 5 April 2014.
Those who applied and were issued a valid FP 2014 certificate prior to15 March 2023 cannot lose their enhanced protection. Those who applied on or after 15 March 2023 and were subsequently issued a valid enhanced protection certificate, can in some circumstances lose their protection.
For more information see PTM176410.
Fixed Protection 2016 (FP 2016)
Fixed protection 2016 could be applied for by individuals who had pensions savings of more than £1 million on 5 April 2016.
Those who applied and were issued a valid FP 2016 certificate prior to the 15 March 2023 cannot lose their enhanced protection. Those who applied on or after 15 March 2023 and were subsequently issued a valid enhanced protection certificate, can in some circumstances lose their protection.
For more information see PTM176410.
Individual Protection 2014 (IP14)
Individual protection 2014 could be applied for by individuals who had pensions savings of more than £1.25 million on 5 April 2014.
Individual protection 2014 cannot be given up and can only be reduced or lost through pension sharing on divorce.
For more information see PTM176510.
Individual Protection 2016 (IP16)
Individual protection 2016 could be applied for by individuals who had pensions savings of more than £1 million on 5 April 2016.
Individual protection 2014 cannot be given up and can only be reduced or lost through pension sharing on divorce.
For more information see PTM176510.
Divorce and international
Allowances protections or enhancements may also be available on divorce where pension credit rights are acquired and in some international non-residence situations or on transfers from recognised overseas pension scheme to UK registered pension schemes.
See PTM175100 for further details on allowance enhancements.
Relying on protection
Where a member wants to take their benefits and rely on a form of protection (other than FP 2016 or IP 2016) they need to provide their scheme administrator with the reference number on the certificate issued by HMRC when they applied for the protection.
The scheme administrator may decide to ask the member for a copy of their protection certificate in order to confirm the value of their protected pension rights and to enable the administrator to determine the correct amount of the member’s individual lump sum and individual lump sum death benefit allowance used up.
Members who have FP 2016 and/or IP 2016 will have only been given a reference number for each type of protection by HMRC, the scheme administrator should accept the reference number as evidence that the individual has the relevant protection.
If an individual wants HMRC to give details of their protection to their scheme administrator then they must authorise HMRC to do so by completing form APSS203.
Pension sharing - impact on protection
The Welfare Reform and Pensions Act 1999 (or Welfare Reform and Pensions (Northern Ireland) Order 1999) includes provisions allowing for an individual’s pension rights to be split or shared with an ex-spouse following a divorce or dissolution of a civil partnership (see PTM029000) and introduces the concept of pension debits and pension credits.
Pension credits and allowance enhancements
A pension credit will increase the ex-spouse's or former civil partner’s existing pension rights. The legislation allows the ex-spouse or former civil partner to enhance their allowances. This is done by claiming an enhancement factor if certain conditions are met.
How this is done depends on whether the pension credit rights were acquired before, or on or after 6 April 2006.