(This archived guidance relates to HMRC discretionary
practice before the 6th April 2006. For current guidance on
Registered Pension Schemes see the Registered Pension Schemes
Manual)
[PN7.20]
It is a fundamental condition of approval that no pension
must be capable of surrender, commutation or assignment (section
590(3)(d) ICTA 1988). There are limited exceptions:
A member may
a. commute benefits on retirement within certain limits (see
Part 8);
b. allocate part of his/her benefits to provide a pension for
a widow/widower or dependant (see Part 12)
c. opt to exchange a non-increasing or limited increase
pension for a smaller pension with greater increases (see
PSI7.1.8), and
d. a member’s benefit rights may be shared with his/her
ex-spouse as part of a financial settlement to a divorce (see
PSI3.5.1 et seq).
Do not confuse assignment or surrender of pension benefits with assignment or surrender of policies. In the latter situation all that happens is that the policy is exchanged for another, or is transferred to a new employer, but the member’s entitlement to benefit remains unchanged. Part 13, Section 4 deals with policy buy-outs and Part 14, Section 3 with policy assignments.
