PTM176410 - Lump sum allowance and lump sum and death benefit allowance: Fixed protection: Overview
If you are looking for information about protections, lifetime allowance and the lifetime allowance charge pre-April 2024 please see the National Archives.
Fixed protection
Fixed protection 2014
Fixed protections 2016
Conditions for keeping the fixed protections
Pensions credits and the fixed protections
Pension debits and the fixed protections
Paying benefits to someone with any of the fixed protections
Fixed protection
Paragraph 14 Schedule 18 Finance Act 2011
From the 6 April 2012 Individuals who had savings of more than £1,500,000 could apply to HMRC for fixed protection (FP12) to protect them from the lifetime allowance charge when those rights came into payment after 6 April 2012.
As of 6 April 2024, lifetime allowance has been abolished, but an individual is entitled to have their lump sum allowance and lump sum death benefit allowance protected.
Individuals who wished to rely on FP12 had to notify HMRC by 5 April 2012.
Individuals did not need to have already built-up pension savings of more than £1,500,000 to apply, but they had to meet these conditions:
- Did not have primary protection,
- Did not have enhanced protection, and
- Were a member of a registered pension scheme or a relieved member of a relevant non-UK pension scheme (see PTM113410)
For those that had a successful late application for FP12 on or after 15 March 2023 there are restrictions on what they are able to do with their future pension savings, more details about this is below.
Lump sum allowance with FP12
Paragraph 14(3)(a) Schedule 18 Finance Act 2011
For an individual with FP12 their lump sum allowance will be £450,000. When an individual has a relevant benefit crystallisation event (see PTM17 the lump sum will then be deducted from the lump sum allowance.
Lump sum and death benefit allowance with FP12
Paragraph 14(3)(b) Schedule 18 Finance Act 2011
For an individual with FP12 their lump sum and death benefit allowance will be £1,800,000. When an individual has a relevant benefit crystallisation event the lump sum will be deducted from the lump sum death benefit allowance.
If an individual had any benefit crystallisation event occur prior to 6 April 2024 then they will need to review the standard transitional calculations for their lump sum allowance and lump sum and death benefit allowance with FP12 at PTM174700.
Fixed protection 2014
Paragraph 1 Schedule 22 Finance Act 2013
From the 6 April 2014 Individuals who had pension savings of more than £1,250,000 could apply to HMRC for fixed protection 2014 (FP14) to protect them from the lifetime allowance charge when those rights came into payment after 6 April 2014.
As of 6 April 2024, lifetime allowance has been abolished, but an individual is entitled to have their lump sum allowance and lump sum death benefit allowance protected.
Individual’s wishing to rely on FP14 had to notify HMRC by 5 April 2014.
Individuals did not need to have already built-up pensions of more than £1,250,000 to apply for FP14. If someone wanted to apply for FP14 they had to meet these conditions:
- Did not have primary protection,
- Did not have enhanced protection,
- Did not have FP12, and
- Were a member of a registered pension scheme or relieved member of a relevant non-UK pension scheme.
For those that had a successful late application for FP14 on or after 15 March 2023 there are restrictions on what they are able to do with their future pension savings, more details about this below.
Lump sum allowance with FP14
Paragraph 1(2)(a) Schedule 22 Finance Act 2013
For an individual with FP14 their lump sum allowance will be £375,000. When an individual has a relevant benefit crystallisation event the lump sum will then be deducted from the lump sum allowance.
Lump sum and death benefit allowance with FP14
Paragraph 1(2)(b) Schedule 22 Finance Act 2013
For an individual with FP14 their lump sum and death benefit allowance will be £1,500,000. When an individual has a relevant benefit crystallisation event the lump sum will be deducted from the lump sum death benefit allowance.
If an individual had any benefit crystallisation event occur prior to 6 April 2024 then they will need to review the standard transitional calculations for their lump sum allowance and lump sum and death benefit allowance with FP14 at PTM174700.
Fixed protection 2016
Parts 1 and 3 Schedule 4 Finance Act 2016
From 6 April 2016 Individuals who had pension savings of more than £1,000,000 could apply to HMRC for fixed protection 2016 (FP16) to protect them from the lifetime allowance charge when those rights came into payment after 6 April 2016.
As of 6 April 2024, lifetime allowance has been abolished, but an individual is entitled to have their lump sum allowance and lump sum death benefit allowance protected.
Individual’s wishing to rely on FP16 had to notify HMRC by 5 April 2025.
Individuals did not need to have already built-up pensions of more than £1,250,000 to apply for FP16. If someone wanted to apply for FP16 they had to meet these conditions:
- Did not have primary protection,
- Did not have enhanced protection,
- Did not have FP12
- Did not have FP14, and
- Were a member of a registered pension scheme or relieved member of a relevant non-UK pension scheme.
For those that had a valid application for FP16 on or after 15 March 2023 there are restrictions on what they are able to do with their future pension savings, more details about this below.
Lump sum allowance with FP16
Paragraph 1(2)(a) Schedule 4 Finance Act 2016
For an individual with FP16 their lump sum allowance will be £312,500. When an individual has a relevant benefit crystallisation event the lump sum will then be deducted from the lump sum allowance.
Lump sum and death benefit allowance with FP16
Paragraph 1(2)(b) Schedule 4 Finance Act 2016
For an individual with FP16 their lump sum and death benefit allowance will be £1,250,000. When an individual has a relevant benefit crystallisation event the lump sum will be deducted from the lump sum death benefit allowance.
If an individual had any benefit crystallisation event occur prior to 6 April 2024 then they will need to review the standard transitional calculations for their lump sum allowance and lump sum and death benefit allowance with FP16 at PTM174700.
Conditions for keeping the fixed protections
An individual with valid fixed protection prior to the 15 March 2023 can accrue benefits, transfer or join new arrangements without risk of losing their protection.
For fixed protection certificates issued on or after 15 March 2023, the conditions for an individual to keep any of their protections are that they:
- Cannot start a new arrangement under a registered pension scheme other than to accept a transfer of existing pension rights,
- Cannot have benefit accrual, and
- Will be subject to restrictions on where and how they can transfer benefits.
If an individual with a certificate issued on or after the 15 March 2023 breaches one of these conditions, they will lose their fixed protection.
The individual must tell HMRC if they lose their fixed protection. See PTM176440 for more information about how and when fixed protection can be lost.
Pensions credits and the fixed protections
For individual’s that were issued valid fixed protection certificates/references on or after 15 March 2023, if they receive a pension credit as a result of a pension sharing order the individual may lose their protection as a result of receiving the pension credit. This is dependent on how the pension credit is received.
It the pension credit is transferred into a new arrangement for the individual the protection will be lost due to the setting up of a new arrangement as the transfer of a pension credit is not a permitted transfer.
However, if the pension credit is transferred into an existing other money purchase arrangement this is not a relevant contribution and the transfer will not cause loss of protection.
If the pension credit is transferred into an existing defined benefits or cash balance arrangement protection will be lost if as a result the member’s rights in the arrangement are increased by an amount that exceeds the relevant percentage.
PTM023000 provides further details on types of arrangements.
Individual’s that have valid fixed protection prior to the 15 March 2023 will not lose their protection as a result of receiving a pension credit, regardless of how this is transferred to the individual.
Pension debits and the fixed protections
For individual’s that were issued valid fixed protection certificates/references on or after 15 March 2023, whether or not they can rebuild their pension rights after they have been reduced due to a pension debit depends on the type of the individual’s arrangements.
Contributions made to an other money purchase arrangement after the effective date of the protection normally lead to benefit accrual causing the loss of the protection. So pension benefits under this type of arrangement cannot be rebuilt following a pension debit.
However, where pension rights under a defined benefits or cash balance arrangement are reduced due to a pension debit it may be possible to rebuild pension rights under that arrangement without losing the protection provided that the relevant percentage is not exceeded. As benefit accrual is an ongoing test carried out by reference to the extent of any increase in pension rights in each tax year, rebuilding would generally need to take place during the tax year in which the pension debit reduction occurred.
Individual’s that have valid fixed protection prior to the 15 March 2023 will not lose their protection as a result of benefit accrual and can rebuild their pension rights.
Paying benefits to someone with any of the fixed protections
If a member has any of the fixed protections and want to rely on it to protect their allowances when they take lump sums, they must tell their scheme administrator that they have the fixed protection.
A member must give their scheme administrator the FP12 of FP14 certificate reference number, or the FP16 reference number (HMRC does not issue a certificate for FP16). This is the minimum legal requirement. A scheme administrator may ask to see a copy of the FP12 or FP14 certificate or the
Unless a scheme administrator is told otherwise, they must proceed on the basis that the member has no form of protection.