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Govt confirms individual pension protection rules to be introduced next year


The Government has confirmed it will introduce an individual protection regime next year following the decision to cut the lifetime allowance for tax-free pension savings from £1.5m to £1.25m.

Chancellor George Osborne announced plans to cut the annual allowance from £50,000 to £40,000 from April 2014 in his Autumn Statement in December. He also confirmed the lifetime allowance will fall from £1.5m to £1.25m from the same date.

At the time, the Government said it will introduce a new fixed protection regime to make sure people who have already built up pension savings worth more than £1.25m are not hit with retrospective tax charges. Under this regime, people will not be allowed to accrue additional pension benefits.

The Government also floated the idea of introducing a new individual protection regime to allow people who have pensions worth more than £1.25m on 6 April 2014 to continue to accrue benefits up to £1.5m.

The Budget confirms a con­sultation will be published in the spring setting out how individual protection will work. It says: “The Government will offer an individual protection regime, in addition to a fixed protection regime, for individuals with pension rights above £1.25m when the standard lifetime allowance is reduced from £1.5m to £1.25m for 2014/15 and subsequent years.”


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