It was reported in our Trade Press this week that HMRC are suprised over the lower take-up of Fixed Protection.

In brief, Fixed Protection will be relevant to those at, above or even close to the Lifetime Allowance, soon to be £1.5m. Due to the way Final Salary schemes are valued, this could translate into a £75,000 per annum pension; but the limit is likely less if tax-free sum lumps are taken into account.

£155,000 additional tax is at stake, and despite some industry pressure to defer the deadline, individuals have to have a form back to HMRC no later than 5th April 2012 – less than 6 weeks away. No further pension contributions should be made, with special rules applying to Final Salary benefits.

The issue is further compounded as once the lifetime allowance moves to £1.5m the government have already confirmed no increases will allowed until 2016. In effect, if an individual achieves 7% investment growth from now until 2016, they should consider Fixed Protection on funds around £1m!

Fixed Protection and the Lifetime Allowance advice doesn’t need to be complicated, and a suitably qualified professional should be able to give an indication of the advisability of applying from Fixed Protection. This is not to say it’s Black & White, but you should be able to make an informed decision.

Fixed Protection and advice around the Lifetime Allowance doesn’t need to be complicated, and a suitably qualified professional should be able to give an indication of the advisability of applying for Fixed Protection. This is not to say it’s Black & White, but you should be able to make an informed decision. Alistair Cunningham, the author of this mailshot, holds several advanced pension qualifications, is a Chartered Financial Planner and Pensions Specialist. He has won several awards, including the FT Adviser Individual Pensions/SIPP IFA of the Year 2011.

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