What is Individual Protection 2016 (IP2016)?

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IP2016 is a fund protection option introduced to coincide with the reduction in the standard lifetime allowance (SLA) from £1.25 million to £1 million from 6 April 2016. It will only be an option for those with pension savings (including any pensions already in payment) of more than £1 million on 5 April 2016, provided they don’t already have primary protection, enhanced protection with dormant primary protection or individual protection 2014.

IP2016 will protect the value of an individual’s pension savings on 5 April 2016 but the protection will be capped at the level of the SLA for 2015/16 of £1.25 million. Any pension savings in excess of £1.25 million can’t be protected under IP2016, and they would be subject to a lifetime allowance charge when pension benefits are subsequently taken.

It will be possible for those with IP2016 to make further pension contributions or accrue additional defined benefits rights after 5 April 2016. 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).

IP2016 can be held on its own or as a back-up to enhanced protection (with no dormant primary protection) or fixed protection (with no back-up individual protection 2014). Where enhanced or fixed protection and IP2016 are both held, then the enhanced or fixed protection will take precedence. If enhanced or fixed protection is lost, then IP2016 will apply.