Switch pension protection to grow cash pot

People who have opted for 'enhanced protection' on their pension plan could receive up to an extra £75,000 tax-free cash if they switch to 'fixed protection' before the tax year ends.

Savers on an enhanced protection plan will see their maximum tax-free cash allowance plummet to £375,000 from April 6th - 25 per cent of the reduced £1.5 million Lifetime Allowance (LTA).

However, as the current LTA stands at £1.8 million, and maximum tax free cash allowance at £450,000, switching to fixed protection before the tax year end deadline could see savers gain an additional £75,000 tax free.

Despite this, enhanced protection does encompass numerous benefits - allowing pension pots to soar to amounts far exceeding the current LTA of £1.8 million, without incurring the 55 per cent tax charge.

In cases where this has not happened, however, savers have just a few weeks to work out whether they would be better off by switching to fixed protection.

Adrian Walker, pension expert at investment platform operator Skandia, commented: "Anyone with enhanced protection and pension savings currently worth less than £1.8 million should seek professional advice urgently to assess whether it would be more beneficial for them to switch to fixed protection."