RPSM03303030 - Scheme Administrator Pages: Protecting pension rights from tax charges: Benefit payments - enhanced protection: Benefits below lifetime allowance

What if the value of the member's current benefit crystallisation event plus previous benefit crystallisation events and pre-commencement pensions is less than the standard lifetime allowance?

The effects of enhanced protection are not seen (apart from any protected lump sum rights) unless the standard lifetime allowance is exceeded on a particular benefit crystallisation event.

This will only happen if the standard lifetime allowance for the tax year of that event is more than the total of the following amounts

• the value of the member's pension rights being put into payment on this current benefit crystallisation event,
• the value of any previous benefit crystallisation event (to obtain its current value, the value of pension rights must be increased in line with the increase in the standard lifetime allowance from its value when the benefits were first taken), and
• the value of any pension rights already in payment at 6 April 2006.

If the total of these amounts is equal to or less than the standard lifetime allowance for the tax year, you should

• pay benefits from your scheme without deducting the lifetime allowance tax charge,
• provide the member with a P60 ( or P60 substitute) at the end of the tax year in question,
• provide the member with a statement telling them what percentage of the standard lifetime allowance has been used up by the benefit crystallisation event (see RPSM03303080), and
• keep records for at least 6 years after the benefit crystallisation event has taken place in case HMRC decide to carry out an audit at a later date.