Since 6 April 2006 there has been no absolute limit on the level of benefits an individual can be provided with under a registered pension scheme such as the Teachers’ Pension Scheme. Instead each individual has an allowance - a Lifetime allowance (LTA) – in respect of all their pension benefits before they become subject to tax charges at the point of taking benefits.

The Lifetime Allowance was frozen at £1,073,100 on 6 April 2021, until April 2026. When the Lifetime Allowance limit reduced from £1.25m to £1m on 6 April 2016, HMRC introduced two types of ‘transitional protection’:

• Fixed Protection (FP16) – any member can apply for this protection, whether your benefits exceed £1million or not, provided you don’t have any ‘relevant benefit accrual’. Therefore, you had to have taken steps to opt out of the Teachers' Pension Scheme and cease active membership of all other registered pension schemes before 5 April 2016.
• Individual Protection (IP16) – you can apply for this protection if the value of your benefits in registered pension schemes from all sources was between £1m and £1.25m as at 5 April 2016. It does allow you to build up further benefits without losing this protection. However, the future LTA is capped at the lower of the value of your benefits at 6 April 2016 and £1.25m.

If you have protection, then you'll need to provide the certificate reference number (for paper certificates) or, a protection notification number, and the Scheme administration number (for online applications) to Teachers’ Pensions, before we can calculate the benefits payable.

From April 2023 whilst the LTA remains at £1,073,100, there is no associated tax charge with it and from April 2024 onwards, there are plans to remove the LTA all together.

We've created a guide to help you understand the changes.