Fixed protection 2016

What is fixed protection 2016?

A further reduction in the lifetime allowance came in 2016 from £1.25 million to £1.00 million. As a result fixed protection 2016 was introduced and was available to individuals who had accrued pension up to 5 April 2016 and from that date, had no contributions paid to any registered pension schemes and ceased active membership of any final salary defined benefit pension schemes.

This gives the individual a personal lifetime allowance of £1.25 million.

When could you apply for fixed protection 2016?

An individual who, on 6 April 2016, did not have enhanced protection, primary protection, fixed protection 2012, fixed protection 2014 or individual protection 2014, can register for fixed protection 2016 (FP2016), if they want to retain the then standard lifetime allowance (LTA) of £1.25 million as their personal lifetime allowance rather than accept the reduction of the standard lifetime allowance to £1 million with effect from 6 April 2016.

For Fixed Protection 2016 to remain valid, the individual must have no ‘benefit accrual’ in any of their registered pension schemes on or after 6 April 2016.

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 2016 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 the standard lifetime allowance had increased to more than £1.25 million, Fixed Protection 2016 would cease and be replaced with the higher standard lifetime allowance.

Please note: The closing date for applications for Fixed Protection 2016 was 5 April 2025. Fixed Protection 2016 must be in place before the individual wants to take benefits.

Can you lose fixed protection 2016?

Fixed protection 2016 can be lost in the following circumstances:

• where the individual has ‘benefit accrual’ on or after 6 April 2016
• 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 2016 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 members to have relevant benefit accrual without breaking fixed protection 2016, provided that fixed protection 2016 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 2016 provided the transfer is a permitted transfer.