PSI25.1.6 - Flexibility in Pension Provision – Introduction - Small Self-administered Schemes

(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)

For some time SSAS have had the ability to defer the purchase of an annuity and in the meantime pay a pension from the scheme's resources. From March 1996, this arrangement was also temporarily extended to insured money purchase schemes (including buy-out contracts) -see MM 17/4/96.

But the facility described in this Part goes further than this in that the pension taken does not have to be at the full amount, but can be a lower amount as decided by the member/survivor.

SSAS now have the choice of continuing with their existing method or adopting the flexibility provisions in Appendix XII of PN. Whichever method is chosen it must be applied to the scheme as a whole. It is not acceptable to offer the choice to individual schemes members or survivors. That said, if a SSAS chooses to adopt the method set out in PN Appendix XII, those members or survivors already in receipt of a pension (where an annuity has not been purchased) prior to the date of adoption may continue with the existing method. In other words, there is no compulsion for those members to switch to the PN Appendix XII basis.

Once a scheme has adopted the provisions described in Appendix XII they will not be able to revert to the former method of deferral of annuity purchase at a later date.