If you have registered with HM Revenue and Taxes (HMRC) to have fixed protection or enhanced protection, automatic enrolment may affect you.
Definition of fixed protection
It allows you to build up to £1.8 million in pension funds without a tax charge. This amount is secure on condition that no further contributions or benefit accrual are made to any pension scheme. If this happens, the fixed protection is lost and the amount reverts back to the lifetime allowance.
Definition of enhanced protection
The lifetime allowance was first introduced in April 2006 and at that time those potentially affected were able to register for enhanced protection. It protects pension savings before 5 April 2006 from a tax charge if you exceed the lifetime allowance.
How automatic enrolment affects fixed or enhanced protection
From October 2012 employers must automatically enrol workers into a workplace pension scheme, if they meet certain criteria. If you are automatically enrolled you may lose your fixed or enhanced protection unless you opt out promptly. Further information can be found in opting out.
Employers must re-enrol workers into a workplace pension scheme every 3 years so you will need to opt out every time this happens if you do not want to lose your fixed or enhanced protection.