Transition to 2006 rules


Fund Protection


Both primary and enhanced protection can be registered. The references issued by HMRC should be stored as these might need to be reported to HMRC on the Event Report after future BCEs. Registering protection is simply notification – HMRC won’t check the data at the time and so full data needs to be stored so that any future HMRC questions can be answered.


It is suggested that MPP is stored for ease of reference but the full calculation workings can be stored on the ‘Calculation Workings’ tab.


The Primary Protection Enhancement Factor is stored as a fraction e.g. 0.5 would be used if the fund value was £2.25m on 6th April 2006.


Lump sum Protection  - Lump sum in excess of £375,000


On the ‘Fund Protection’ tab, details of the lump sum can be stored if the total lump sum rights exceeded £375,000 on 6th April 2006 (including the deemed lump sum from pensions in payment). Once the £375,000 test has been passed, the amount and percentage of lump sum to store is based on the total uncrystallised lump sum rights which could be less than £375,000.


Lump sum Protection  - Lump sum > 25%


The ‘2006 Fund Value’ is the value of the member’s share of the SSAS at 6th April 2006.


The ‘2006 lump sum’ is the maximum lump sum that the member could have received from the SSAS on 6th April 2006 (after having apportioned the maximum lump sum across all schemes of each employment).


The ‘Contribution paid after April 2006’ determines which formula is used to calculate the lump sum at retirement.


At various times it might be useful to stored projected or draft data. Eventually the certified (or confirmed) information will be stored. The ‘Data Status’ box shows whether the data has been confirmed.


The ‘Protected Early Retirement Age’ can be used if a member of a SSAS had the right to retire between age 50 and 55 (subject to the conditions in the RPSM).


Calculation Workings


Calculations can be pasted into the ‘Calculation Workings’ tab from a Word document or any other source.  Alternatively, the details can be typed in directly.


If a member does not retire for many years then it could be very important to be able to prove how the protected benefits were calculated (rather than just supplying results).


Pensions in Payment - Deemed BCE


When the first BCE happens, any pensions that were in payment at April 2006 have to be taken into account. The amount to be used is the amount of the pension in payment at the date of the first BCE, not necessarily the amount being paid in April 2006 i.e. allowing for any increases between April 2006 and the first BCE. It is suggested that the pension in payment (max drawdown) is stored at April 2006 and the figure is updated each time the limit is recalculated until the first BCE date.


Fixed Protection 2012, 2014 and 2016


The lifetime allowance reduced from £1.8m to £1.5m on 6th April 2012, then to £1.25m on 6th April 2014 and then £1m on 6th April 2016. The previous lifetime allowance of £1.8m, £1.5m or £1.25m could be retained by applying for Fixed Protection before the changes were effective. This screen allows you to store the progress towards obtaining fixed protection and then the records of each type of protection. The Benefits at BCEs program will take into account Fixed Protection 2012, 2014 and 2016.


Individual Protection


Although it will occur very infrequently in SSASs and SIPPs, the details of Individual Protection can be stored, including the fund value that is being protected.


The calculation programs do not allow for Individual Protection but it is easy to make a manual allowance when processing a BCE.