Pension news – Temporary applications for fixed and individual protection

Tax Comments Off on Pension news – Temporary applications for fixed and individual protection

You may be aware that applications for the latest round of pension protections are not expected to be available until sometime in July after the Finance Act 2016 receives Royal Assent. This leaves issues for those who are looking to protect their pension benefits but also wish to take those benefits before they can apply for protection. HMRC have therefore made arrangements for temporary applications to be made.

Applications, in writing, need to contain basic information (name, date of birth and national insurance number) and confirmation that no other current forms of protection are held together with the value of pensions where individual protection is being requested.

It is important that all the details are included and are correct because HMRC will reject interim applications for protection with incomplete information.

HMRC will issue a temporary reference number which can then be used with a scheme administrator to ensure that the correct level of lifetime allowance is used when a benefit is taken.

Applications should only be made if there is an intention to crystallise benefits in excess of the standard lifetime allowance prior to full applications being available in July.

It should also be noted that receiving a temporary reference number does not remove the need for an application for protection to be made when the online system becomes available.

As this is a technical area we recommend that you engage an independent financial adviser who specialises in pension advice to assist you when considering such applications and we would be happy to provide some names for consideration if requested.

Please contact Sue Stephens for more information.