Primary protection works by ‘modifying’ the individual’s standard lifetime allowance. The result is achieved by determining a ‘primary protection factor’ and applying it at each subsequent benefit crystallisation event (BCE).

The factor is found through the simple:

(RR – SLA)/SLA

where:

RR is the value of the individual’s pension rights at 5 April 2006; and

SLA is £1.5m.

For example, suppose the value of funds was £3m. The factor is (£3m – £1.5m)/£1.5m = 1.

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