Pension Fixed Protection

Pension Fixed Protection

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Anyone seen anything definitive regarding the Fixed protection regime for pensions following the new rules announced?

Will the new regime effectively make the protections irrelevant and replace the 55% tax on pension fund excesses by the simple  Highest rate of Income Tax on all funds withdrawn?

I appreciate legislation is to follow and there are hybrid rules meantime but if the protections are now irrelevant, it makes sense for higher rate taxpayers to resume maximising pension contributions and blowing the protections?

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By JoeOBrien1983
07th May 2014 09:24

The budget makes no difference to the Lifetime Allowance.

Fixed Protection will continue exactly as it does now.

Any funds above £1.25 million will be taxed at 55% if taken a lump sum or 25% if taken as income (followed by the clients marginal rate tax).

If protection is in place the Lifetime Allowance (LTA) will remain at the higher level. Depending on which protection was utilised.

The budget simply makes it easier to access pension funds, its makes no change to funds generated above the prescribed thresholds.

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