ARTICLE · 02 APRIL 2012

Fixed Protection And Life Cover: New Confusion

CMS Cameron McKenna Nabarro Olswang

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We have been made aware of an issue which, although technical in nature, could have important and urgent implications for those members of registered pension schemes who have applied, or who are still intending to apply, for "fixed protection".

United KingdomTax

Peter Coyne

Laura Jamieson

We have been made aware of an issue which, although technical in nature, could have important and urgent implications for those members of registered pension schemes who have applied, or who are still intending to apply, for "fixed protection". The concern relates to those members who will continue to receive life cover under a registered scheme on or after 6 April 2012. A registered scheme for these purposes may be a pension scheme or an arrangement established specifically to provide death in service benefits.

What is fixed protection?

On 6 April 2012, the lifetime allowance ("LTA") for pension savings under registered schemes reduces from the current level of £1.8 million to £1.5 million. Members who have already built up savings of more than £1.5 million (or who were anticipating doing so, on the basis that the LTA would not reduce) may therefore apply for fixed protection. This allows such members, notwithstanding the reduction in the LTA, to take

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