Can I cancel my lifetime protection and take a UFPLS from one of my DC pensions?

03 November 2021

Question by Robert

Hi team,

This is a pension question. If someone has lifetime protection for £1.5m and has multiple defined contribution pensions one of which is in drawdown. Could they cancel lifetime protection to take a UFPLS from another of their defined contribution pensions accepting the new Lifetime allowance of £1,070,000?

Answered by Boring Money

Hi Robert,

Thanks for your question. The below is not a recommendation and you should get advice before making any decisions.

There are generally two types of protection that would give a lifetime allowance of £1.5m. That being fixed protection 2014 and individual protection 2014.

Here are the ways you can lose these protections:

Individual protection 2014
There is only one situation where you can lose this protection and that is following divorce if you were to required give part of your pension away.

Fixed Protection 2014
There are a few ways you can lose this:

- Contributions into a defined contribution pension
- Accruing further benefits under a defined benefit pension
- Becoming a member of a new pension arrangement
- Certain types of pension transfer

So I am not sure why they would need to cancel their lifetime allowance to take UFPLS? Lifetime allowance is relevant to the person and not to a particular pension.

It might be that they have another form of protection in which case please let me know and would be happy to talk it through.

Cancelling £1.5m protection if they are over the current lifetime allowance is a decision that is likely to cost a lot of money. So they would need to get advice before cancelling any protection they have.

Luke James

Independent Financial Adviser

Answered by

Boring Money