The Chancellor, George Osborne, gave his budget speech yesterday. Whilst claiming to be in support of retirees, the more detailed announcement on HM Treasury’s website highlights a consultation will take place on a “personalised protection” regime when the annual allowance is cut from £1.5m to £1.25m in 2014.
In contrast to Fixed Protection, Personalised Protection will be available for anyone with pension benefits above £1.25m at the time when the Lifetime Allowance reduces in April 2014. Benefits can continue to accumulate, protected at the higher of £1.5m and any future increases in the Lifetime Allowance.
In contrast Fixed Protection 2014, subject to final law, will be available to all, and protect the Lifetime Allowance at £1.5m but individuals will need to give up future membership, and contributions to, authorised pension schemes.
The Treasury will consult on the detail for the regime in the coming months and legislation will be included in Finance Bill 2014.
The announcement of these changes was largely disclosed in the Autumn Statement in December 2012.