Where an individual acquired
pension credit rights before 6 April 2006 an
individual may have claimed an additional
lifetime allowance to protect the pension credit
rights from the lifetime allowance charge. If they have they must
show a certificate to the scheme administrator confirming that they
have this protection.
Example
Natalie has pension credit rights valued at £150,000 on 5 April 2006. Natalie’s certificate will show that she has an additional lifetime allowance of plus 0.1 of the standard lifetime allowance. This means that the scheme administrator can pay benefits up £1.65 million in the tax year 2006/07 instead of £1.5 million without applying the lifetime allowance charge.
Natalie’s higher lifetime allowance is indexed in exactly the same way as the standard lifetime allowance. So if she took no benefits until January 2011 when the standard lifetime allowance will be £1.8 million the amount protected from the lifetime allowance will be £1.98 million.
Where an individual has primary protection there will be no additional lifetime allowance on account of a pension credit. This is because all of their rights at 5 April 2006 will have been valued inclusive of any pension credit. The individual will present one certificate for primary protection as it will include any pension credits.
| Glossary ( RPSM20000000) |
