Options at A-day
What options do I have at A-day?
The HM Revenue and Customs will allow you to register for transitional
protection. There are two different types and you will be able to register
for either or both.
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Primary Protection is available only if your pension
benefits at A-day exceed the LTA. Primary Protection gives you an
individual LTA based on the value of your benefits at A-day. This will
grow at the same percentage rate as the standard LTA so, if you keep
earning pension after A-day you may still end up paying some extra tax.
You will have until 5 April 2009 to register for primary protection.
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Enhanced Protection is available to any scheme member.
It protects the benefits you have built up before A-day but – put very
simply – doesn’t allow you to benefit from further pensionable service
(or make any more contributions to a money purchase arrangement) from
A-day. You have until 5 April 2009 to register for Enhanced Protection
but, if you want to do this, you should probably make your decision
before A-day.
The decision on whether to opt for Enhanced Protection is not
straightforward. We will be providing higher-earning civil servants with
further detailed information in the autumn to help them decide.
I’m not quite projected to be at the LTA but the calculator still puts me
in the ‘red risk’ category. What options do I have to protect my pension
benefits?
You can apply for Primary Protection only if your benefits at A-day are
over £1.5 million, but anyone can apply for Enhanced Protection (but they
need to understand the implications). Don’t forget that, provided your
benefits remain under the LTA at the time you start taking your pension,
you won’t be affected.
