RPSM11101060 - Technical Pages: Lifetime allowance: Level of lifetime allowance: Enhancement factor due to primary protection

Lifetime allowance enhancement factor due to primary protection

Members with accrued rights of more than £1.5 million as at 5 April 2006 were entitled to apply for primary protection under the protection of existing rights provisions in Finance Act 2004 up to 5 April 2009.

The extent to which the member’s accrued rights, as valued on 5 April 2006, exceed the £1.5 million standard lifetime allowance for the 2006/07 tax year is reflected in the calculation of a relevant enhancement factor. This factor represents how much extra over and above the £1.5 million figure the individual’s rights were valued at on 5April 2006, expressed as a fraction of that standard lifetime allowance figure.

This factor is referred to in the legislation as the primary protection factor.

When and how this lifetime allowance enhancement factor is calculated is dealt with in Chapter 3 - see RPSM03102000.

In calculating the primary protection factor, the value of a member’s rights held in a retirement benefits scheme on 5 April 2006 are limited to the value of the maximum benefits that could be provided to that individual under HMRC limits that applied at that time.