Scheme specific tfc & lifetime allowance

Hi Paraplanners,

Can anyone explain the interaction between these?

I thought you were limited to 25% of LTA unless you had lta protection incl enhanced cash, but someone mentioned that protected tfc under a S32 is exempt as long as protected amount in itself does not exceed lta. Is this how it works? Do you need to vest S32 last?

Any help much appreciated...


  • TFC (as it was at A Day) did not require any protection if, as at A Day your TFC was in excess of 25% of the A Day fund value.
    This protection was, in effect, converted into an amount, so it is not the percentage figure which continues.
    Essentially, everyone got protected TFC at A Day without having to do anything. It was / is not linked to primary or enhanced protection.
    Here we are in 2017 and this is a problem which many people could face. Prove you were entitled to enhanced TFC at A Day. The calculation was based on salary and service (potentially an average of at least 3 consecutive years ending no later than 10 years prior to A Day). Increasingly those pension members with enhanced TFC entitlement will either have lost it (because the revaluation etc meant that years later 25% of the total fund value was better, or they have died or indeed taken benefits) so understanding of this issue is 'fading' as it drops out of the whole pension system.
    It is, however, a trap you need to be aware of, for anyone who was a member of an occupational scheme prior to April 2006. Transferring from an occupational scheme to a PP (unless via buddy transfer) results in loss of TFC if this is done post A Day. (I'm not going to get into S32 to S32 transfers carried out now in this post.)
    Proving an entitlement can be difficult as the records to support it may well no longer exist. Salary records could be with a long closed employer; HMRC has shredded any data they had on income.
    These younger paraplanners and advisers may well not know of Pre 87, 87-89 and Post 89 benefit regimes - regretfully I am old enough to know about these - it was part and parcel of G60 when I sat it!!
    So not only is it S32 plans which may have an enhanced PCLS but also older occupational schemes as it is the occupational scheme regime which gave rise to this enhanced TFC issue.
    The enhanced TFC is revalued post A Day; I always have to look the calculation up and don't have time to do that now I'm sorry; in essence you need to look at the fund growth post A Day, the increase (or decrease!) in the LTA since A Day and also if contributions have been made post A Day as well.
    As regards do you take benefits from a plan with enhanced TFC last or first or somewhere in between, as with virtually all planning issues there are no (and can be no) hard and fast rules. It depends....on the client and their circumstances.
  • Hi Catherine, 

    If a member has scheme specific protection on the lump sum, they can take the lesser of the revalued protected amount and the LTA they have available as a pcls. 

    Order of crystallisation isn't relevant. Have you got any real life values for the case you're dealing with? 
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