RPSM04104836 - Technical Pages: Taxation: Unauthorised Payments: Scheme Sanction Charge: Prescribed unauthorised payments that are not scheme chargeable

Unauthorised payment that is not scheme chargeable

[S241(2), The Registered Pension Schemes (Unauthorised Payments by Existing Schemes) Regulations 2006 - SI 2006/365] 

Where the trustees or manager of an existing pension scheme that automatically becomes a registered pension scheme on 6 April 2006 make an unauthorised payment which

• is made under the discretion conferred on them by regulation 3(1) of the Registered Pension Schemes (Modification of Rules of Existing Schemes) Regulations 2006 (see RPSM04104835) or
• would have made the payment under the discretion that would have been conferred on them by regulation 3(1) of the Registered Pension Schemes (Modification of Rules of Existing Schemes) Regulations 2006 (see RPSM04104835) had the regulation applied to the scheme and the payment is made during the transitional or
• would have made the payment under the discretion that would have been conferred on them by regulation 3(1) of the Registered Pension Schemes (Modification of Rules of Existing Schemes) Regulations 2006 had the regulation applied to the scheme had the payment been made during the transitional period in relation to the scheme (see RPSM04104835)

the unauthorised payment will not be a scheme chargeable payment to the extent that the payment is made in respect of

• subsisting rights that have accrued under defined benefits arrangements before 6 April 2006 or,
• contributions which have been paid to a scheme under money purchase arrangements before 6 April 2006.

Where such an unauthorised payment is made and it comprises a mixture of subsisting rights that have accrued under defined benefits arrangements before 6 April 2006 or contributions which have been paid to a scheme under money purchase arrangements before 6 April 2006 and other accrued defined benefit rights or contributions which have been paid to a scheme under money purchase arrangements after 6 April 2006, the balance of the payment relating to those other rights or post 5 April 2006 money purchase contributions will be a scheme chargeable payment.

See RPSM04104840 about a further condition relation to surplus additional voluntary contributions.