PSI14.1.4 - Transfer Payments: General Amount of Transfer Value
(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)
[P10.26]
A member has a right to a transfer value which is at least
the cash equivalent of the pension benefits to which he or she
would have been entitled if they had been left in the former
employer's scheme (paragraph 12 Schedule 1A SSPA 1975). Regulations
made under paragraph 13 of Schedule 1A require transfer values to
be calculated on a basis consistent with guidelines issued by the
Institute and Faculty of Actuaries and with the methods and
assumptions used to calculate the benefits to be granted to the
member in respect of a transfer payment accepted by the scheme.
Where a member opts for the cash equivalent of his or her revalued
benefits to be applied as a transfer value, our requirements depend
on when the scheme was approved. For schemes approved prior to 29
November 1991, (the publication date of the 1991 edition of PN) our
only requirement is that the transfer value should not exceed the
member's actuarial interest in the scheme.
We take the view that the term “member’s
actuarial interest” means the present value of the sum
required at Normal Retirement Date to provide the member’s
prospective benefits. Any amount above this sum is a
surplus and may not be transferred. For schemes approved on or
after 29 November 1991, the transfer value must be limited to the
amount which is sufficient to provide the maximum benefit on the
basis that the member had left pensionable service at the date of
taking the transfer (or, where the member had already left service
prior to that date, the maximum at that date plus any appropriate
increases in respect of the intervening period). The relevant
maximum in these circumstances is as set out in Section 3 of Part
13. You should note, however, that there is no restriction on the
amount of a transfer value paid in the following circumstances:
- from a simplified defined contribution scheme;
- from a free-standing additional voluntary contribution scheme;
- to a scheme of the same employer, other than a simplified defined contribution scheme;
- to a scheme of a different employer where continuous service has been granted.
Where an employee’s benefit entitlement in the transferring scheme is
- permanently reduced by a pension sharing on divorce order (see PSI3.5.4), and
- the pension debit must be taken into account for Revenue limits purposes (see PSI6.5.89)
details of the pension debit must accompany the transfer payment unless the transfer is to a simplified defined contribution scheme (see PSI14.2.56).
