Are you retiring this August?

22 March 2016

Are you looking to draw on your pension benefits between 6 April and 31 August 2016? If so, you might need to apply for protection.

Following the 2015 Budget, the Government announced that the Lifetime Allowance will reduce from £1.25 million to £1 million with effect from 6 April 2016 (further information is provided in our guidance paper Pensions and Tax Liability).

In section 5 of their Newsletter 73, HMRC has advised that the legislation for both the reduction in the Lifetime Allowance and the protection regimes (fixed protection 2016 (FP2016) and individual protection 2016 (IP2016)) will be delivered in the Finance Bill 2016, therefore scheme members cannot apply for protection until after April 2016. Further, individuals cannot notify HMRC of their intention to rely on FP2016 in advance. Individuals who want to rely on FP2016 should start to consider what arrangements they need to make to stop accruing benefits after 5 April 2016.

As a result, there will be a short period between the new protection regimes becoming available in April 2016 and the introduction of the new online self-service in July 2016.

Interim process

During this time, Teachers’ Pensions will introduce an interim process for pension scheme members who want to take benefits before the introduction of the new online service. Scheme members will be able to write to HMRC between April 2016 and July 2016 and TP will check the details of your protection and respond in writing. This may then be presented to the scheme administrator in advance of the full application being made after July 2016.

Further details about protection are provided in HMRC’s Newsletters 74  and 75, and which also provide details of the interim process for obtaining a temporary number for an individual retiring before 31 July 2016. As stated in the bulletins, scheme members are not able to apply for FP2016 or IP2016 before 6 April 2016.

Newsletter 76 provides sample letters in Appendices 1 and 2 that can be used for individuals claiming FP16 and IP16. The newsletter also specifically refers to those crystallising benefits soon after 6 April 2016 and who will not have their temporary HMRC reference number, confirming protection.

If you require further information or assistance, the following may be contacted:
Teachers Pensions
ASCL hotline 
Lighthouse Group (telephone 01273 523749 with your ASCL membership number)
Simplitax (enquiries@simplitax.com)

See the latest update on pensions by ASCL’s Pensions Specialist Stephen Casey in Issue 90 of Leader.  

Website trial
HMRC has requested assistance in testing their online protection application portal, click to read their news article on the members section on the Teachers Pensions website. If any member who may be affected by the Lifetime Allowance of £1 million would like to participate in this trial, please follow the instructions on this link to HMRC.