HMRC Clarifies Position On Fixed Protection And Life Assurance

Following our recent note about life assurance for high earners taking fixed protection after 6 April 2012, HMRC have issued a formal statement in response to representations made by the pensions industry.

However, depending on a particular scheme's rules and the insurance policy backing the benefit, fixed protection could potentially still be lost following payment of an insurance premium.

What HMRC are now saying

HMRC's revised position is as follows:

1. Where the only death benefit payable for fixed protection members after 6 April 2012 under a registered scheme's rules is an amount equivalent to what is paid under an insurance policy, this is a money purchase (defined contribution) arrangement and so any contribution or premium paid after 6 April 2012 will therefore result in fixed protection being lost.