PSI14.2.46 - Transfer Payments: Benefits from Transfer Payments - Benefits for Added Years - Unacceptable Augmentation
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(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)
Although practitioners are no longer required to report the provision of added years, in certain circumstances, you may consider that a check is appropriate. If so, you should obtain the following details:
- the employee's length of service and final remuneration in the previous employment,
- the amount of the transfer payment,
- the starting salary and length of service to NRD with the new employer, and
- the number of added years it is proposed to grant and the basis of calculation.
When details are received, first check that there is no unacceptable augmentation. This involves looking at the assumptions used by the scheme's actuary or the Life Office to see whether they can be regarded as reasonable. This is easier where the scheme is self-administered because the actuary's assumptions will normally be those used in the actuarial report (except perhaps where the transfer has been made in kind, such as by assignment of an insurance policy, rather than in cash). Where a transfer in kind has been accepted the actuary may consider that the future growth prospects for that asset are different compared with the scheme's other investments. It is less easy to make comparisons where the receiving scheme is policy-operated. You can use the Life Office's normal funding assumptions as a yardstick but if you need further information ask for it.
