CPPIB Cash in Lieu Allowance Guide

Lifetime Allowance

Overview

• Prior to 06 April 2023, the Lifetime Allowance (LTA) was the maximum pension value that could be generated by an individual before excess tax charges applied.

• The LTA reached a peak of £1.8m in 2011/2012 but subsequently reduced in 2012, 2014 and 2016. It stood at £1,073,100 in 2022/2023 before being abolished.

Fixed Protection

• Individuals may have previously applied for Fixed Protection in 2016, 2014 or 2012 or even Enhanced Protection, going much further back.

• These forms of protection meant that higher LTAs could be retained but in return, no further contributions could be paid after certain dates. This includes both personal and employer pension contributions.

• Paying additional contributions after April 2023 does not forfeit any form of Protection. Therefore, contributions can re-start for any members with Protection.

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