Posted: November 1, 2018
This article is for anyone meeting all of the following criteria:
• Pension pot value exceeding £1m
• Secured lifetime allowance Fixed Protection (either 2012, 2014 or 2016)
• Employed status
If you have secured fixed protection on your pension lifetime allowance limit, beware of any employment income that you currently have.
One of the key rules of Fixed Protection is that you can no longer contribute to a pension scheme.
Automatic enrolment started back in October 2012 and since then all employers have received their staging date and should have enrolled their staff into a qualifying pension scheme.
Being auto-enrolled into a pension scheme is not exempt under the fixed protection rules and, no matter how small or trivial the amounts may be, your fixed protection status is seriously at risk.
Employers have a duty to auto-enrol staff when commencing employment and, if an employee has opted out, to re-enrol that employee every three years.
Once enrolled, the statutory deadline for opting out is 1 month and therefore the potential tax consequences could be severe if any correspondence is left unopened or left to one side until you next speak with your tax/financial advisor.
We strongly recommend discussing your personal circumstances with an independent financial advisor if you think you may be at risk.
Burgess Hodgson would be happy to discuss the tax consequences of any pension decisions you make with your financial advisor and would be happy to discuss your pension from a tax perspective should you wish to understand the tax position of your fund.
Guy Vine BEng ACA. E-mail: GV@burgesshodgson.co.uk