Benefit crystallisation event
When pension benefits are taken, a benefit crystallisation event (BCE) occurs and a test is carried out to determine whether the member has sufficient unused lifetime allowance. Part of this test involves revaluing any previously crystallised amounts in line with changes in the lifetime allowance since the previous BCE took place.
After each BCE, the pension scheme administrator will issue a statement confirming the percentage (%) of lifetime allowance used by that event.
Lifetime allowance protections
The table below details the various lifetime allowance protections and shows an easy way to revalue previous benefit crystallisation events at the point further pension benefits are taken.
The table should be read in conjunction with our accompanying articles Lifetime Allowance calculations for different forms of protection and Tax-free cash under the life allowance rules.
| Type of Protection | Personal Lifetime Allowance | Previous benefit crystallisation events value | Example |
|
None |
Standard lifetime allowance (currently £1,073,100) |
Apply the % of lifetime allowance previously used to the Standard lifetime allowance (currently £1,073,100) |
|
|
Primary Protection |
£1,800,000 + (£1,800,000 x Primary Protection factor) |
Where the previous BCE was before 06/04/2014, apply the % of lifetime allowance used at that BCE to £1,500,000 Where the previous BCE was on/after 06/04/2014, apply the % of lifetime allowance used at that BCE to the Standard lifetime allowance (currently £1,073,100) |
|
|
Enhanced LTA – Pension credit or international enhancement factors |
SLTA + (LTA x enhancement factor) where: SLTA is the standard lifetime allowance applicable at the point of the BCE LTA is a value dependant on when the enhancement factor is given. If it is given:
|
Apply the % of lifetime allowance previously used to the standard lifetime allowance (currently £1,073,100) |
|
|
Fixed Protection 2012 |
The greater of £1,800,000 or the standard lifetime allowance (currently £1,073,100) |
Apply the % of lifetime allowance previously used to the greater of £1,800,000 or the standard lifetime allowance (currently (£1,073,100) |
|
|
Fixed Protection 2014 |
The greater of £1,500,000 or the standard lifetime allowance (currently £1,073,100) |
Apply the % of lifetime allowance previously used to the greater of £1,500,000 or the standard lifetime allowance (currently (£1,073,100) |
|
|
Fixed Protection 2016 |
The greater of £1,250,000 or the standard lifetime allowance (currently £1,073,100) |
Apply the % of lifetime allowance previously used to the greater of £1,250,000 or the standard lifetime allowance (currently (£1,073,100) |
|
|
Individual Protection 2014 |
The greater of the value of the individual’s total pension savings on 05/04/2014 (capped at £1,500,000), or the standard lifetime allowance (currently £1,073,100) |
Apply the % of lifetime allowance previously used to the greater of the Individual Protection lifetime allowance or the standard lifetime allowance (currently £1,073,100). |
|
|
Individual Protection 2016 |
The greater of the value of the individual’s total pension savings on 05/04/2016 (capped at £1,250,000), or the standard lifetime allowance (currently £1,073,100) |
Apply the % of lifetime allowance previously used to the greater of the Individual Protection lifetime allowance or the standard lifetime allowance (currently £1,073,100). |
|
|
Enhanced Protection |
Lifetime allowance charge does not apply. |
View an example | |
For further information see our article Lifetime Allowance Calculations for different forms of protection.