Fixed protection 2014

What is fixed protection 2014?

The lifetime allowance was further reduced in 2014 from £1.5 million to £1.25 million, fixed protection 2014 was introduced and was available to individuals who had accrued pension funds up to 5 April 2014 and from that date, had no contributions paid to any registered pension schemes and ceased active membership of any final salary defined benefit schemes.

This gave the individual a personal lifetime allowance of £1.5 million.

When could you apply for fixed protection 2014?

Up to 5 April 2014, an individual who did not have enhanced protection, primary protection or fixed protection 2012, could register for fixed protection 2014 (FP2014), if they wanted to retain the then standard lifetime allowance (LTA) of £1.5 million as their personal lifetime allowance rather than accept the reduction of the standard lifetime allowance to £1.25 million with effect from 6 April 2014.

For Fixed Protection 2014 to remain valid, the individual must have no ‘benefit accrual’ in any of their registered pension schemes on or after 6 April 2014.

Benefit accrual includes personal and employer contributions to money purchase schemes such as self invested personal pensions (SIPPs) and  small self administered schemes (SSASs) and benefit accrual in a defined benefit or cash balance scheme above a certain amount.

An individual cannot give up fixed protection 2014 but if they lose it, e.g. because they have benefit accrual, they must write and tell HM Revenue & Customs (HMRC) of this within 90 days of the protection being lost.

If fixed protection was lost, the individual would have reverted back to the standard lifetime allowance, unless they had, or subsequently registered for individual protection.

Can fixed protection 2014 be lost?

Fixed protection 2014 can be lost in the following circumstances:

• where the individual has ‘benefit accrual’ on or after 6 April 2014
• a transfer of an individual’s benefits from one scheme to another that does not qualify as a ‘permitted transfer’, e.g., a transfer from a money purchase scheme to a defined benefit or a cash balance pension scheme. (Permitted transfers include transfers from defined benefit schemes to money purchase schemes and transfers between money purchase schemes subject to satisfying certain requirements)
• becoming a new member of a pension scheme and having relevant benefit accrual – please see auto-enrolment
• if the member obtained fixed protection 2014 on or after 15 March 2023 and, for example, relevant benefit accrual took place.

With effect from 6 April 2023, it has been possible for member to have benefit accrual without breaking fixed protection 2014, provided that fixed protection 2014 had been confirmed by HMRC prior to 15 March 2023.

A transfer of rights from an individual’s pension scheme for an ex-spouse to another scheme following a pension sharing order on divorce, does not cause loss of the individual’s Fixed Protection 2014 provided the transfer is a permitted transfer.