What is individual protection 2014 (IP2014)?

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IP2014 is a fund protection option that was introduced to coincide with the reduction in the standard lifetime allowance (SLA) from £1.5 million to £1.25 million from 6 April 2014. It will only be an option for those with pension savings (including any pensions already in payment) of more than £1.25 million on 5 April 2014, provided they don’t already have either primary protection or enhanced protection with dormant primary protection.

IP2014 will protect the value of an individual’s pension savings on 5 April 2014 but the protection will be capped at the level of the SLA for 2013/14 of £1.5 million. Any pension savings in excess of £1.5 million can’t be protected under IP2014, and they would be subject to a lifetime allowance charge when pension benefits are subsequently taken.

It will be possible for those with IP2014 to make further pension contributions or accrue additional defined benefits rights after 5 April 2014. However, these pension savings will be subject to a lifetime allowance charge when benefits are taken if they exceed an individual’s personal lifetime allowance (or the SLA, if higher).

IP2014 can be held on its own or as a back-up to enhanced protection (with no dormant primary protection) or fixed protection (either the 2012 or 2014 version). Where enhanced or fixed protection (2012 or 2014) and IP2014 are both held, then the enhanced or fixed protection will take precedence. If enhanced or fixed protection is lost, then IP2014 will apply.