Primary or enhanced lifetime allowance protection

These are protections for benefits earned up to 5 April 2006 in respect of those high earners affected by the introduction of the lifetime allowance from 6 April 2006.

Under HM Revenue and Customs rules, if the value of your pension benefits at 5 April 2006 was more than the 2006/2007 lifetime allowance of £1.5million and you have registered for primary protection, you have an individual lifetime allowance based on how much your benefits at 5 April 2006 exceeded the value of the 2006/2007 standard lifetime allowance. Your individual lifetime allowance increases at the same rate as the standard lifetime allowance.

You could register for enhanced protection if the value of your pension benefits at 5 April 2006 exceeded the 2006/2007 lifetime allowance of £1.5million, or if you believed they might in the future exceed the standard lifetime allowance, or if you believed your pension benefits in any one year would increase by more than the annual allowance. Under enhanced protection you do not pay tax on benefits in excess of the lifetime allowance provided your benefits at retirement do not exceed the value of your benefits at 5 April 2006 as increased after then, in general terms, by the greater of 5% per annum, the rise in the Retail Price Index or increases in your pensionable pay.  If the limit is exceeded, you will pay tax on the excess.

In both cases you must have registered with HM Revenue and Customs by 5 April 2009.