Fixed Protection

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The lifetime allowance reduced to £1.5 million in 2012/13 and a new fixed protection was introduced.
 
You can't have fixed protection if you have either primary or enhanced protection. With fixed protection your lifetime allowance (LTA) is fixed at £1.8 million.
 
The maximum tax free lump sum you can take on retirement is the lesser of:
 
  • 25% of the capital value of your LGPS benefits, or

  • 25% of the LTA which, for those with fixed protection, is £450,000 (i.e. 25% of your LTA of £1.8 million) or if you have previously taken payment of (crystallised) pension benefits, 25% of the remaining LTA.

 
You will lose fixed protection if you start a new pension arrangement, other than to accept a transfer of existing pension rights, or if your benefits increase by more than the cost of living increases, or if you pay contributions into a money purchase pension arrangement other than to a life assurance policy providing death benefits that started before 6 April 2006. You will also be subject to restrictions on where and how you can transfer benefits.
 
If you lose fixed protection you must notify HM Revenue & Customs (HMRC) within 90 days. Failure to do so could result in a fine of £300 and a penalty of up to £60 per day after the initial fine has been issued until you supply them with the required notification.
 
To have fixed protection you must have applied to HMRC in their prescribed form on or before 5 April 2012.