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More than 18,000 could lose enhanced protection

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AJ Bell has obtained figures from a freedom of information request which suggest that over 18,000 pension savers could stand to lose enhanced protection on their pension benefits come auto-enrolment.

Savers could apply for enhanced protection in April 2006 to protect their pension funds from high tax charges if they were valued at more than the Lifetime Allowance when they came to draw benefits. However the terms of enhanced protection stipulate that protection will be lost if additional contributions are made to the pension scheme. Therefore if savers with enhanced protection get auto-enrolled into their company pension scheme, they risk making contributions inadvertently.

It is important that anyone with enhanced protection who wants to retain that protection makes sure that they opt-out of auto-enrolment. The industry has called for provisions to be made for high earners.

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Pointon York SIPP Solutions Limited does not give advice, and this article should not be construed as advice. Before making any financial decision we strongly recommend that you seek financial advice and ensure you understand the risks of your decision. To find an adviser in your local area visit www.unbiased.co.uk, an independent search website.

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