PSI25.3.14 - Flexibility in Pension Provision – Flexible Use of AVCs - Transfers

(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)

Transfers are permitted before employer funded benefits come into payment, even where AVC income drawdown has commenced.

However the requirement in PSI14.1.10 that a transfer payment should represent the whole of a member's benefits under the transferring scheme must be complied with. In other words, where the AVCs being drawn down are held under the main scheme of the employer, the funds underlying both the member's AVCs and employer funded benefits must be included in the transfer.

The normal restrictions apply to transfers from FSAVC schemes i.e. they may be made to another FSAVC or to a scheme of the employer only.

For the receiving scheme (or Life Office in the case of a buy-out contract) to determine whether the requirements of PSI25.3.9 must be applied to a transferring member, the transferring scheme (or Life Office) must supply to the receiving scheme (or Life Office):

• Details of the status of the member i.e. whether a member is a controlling director or has had annual earnings after age 50 from any source to which the transferring AVC benefits relate that exceed half the permitted maximum
• A statement of the member's annual earnings after age 50, and
• The aggregate amount of AVC pension drawn in the period up to the date of transfer

The transferring scheme will be required to provide the additional information irrespective of the fact that the transfer scheme may not offer the income drawdown facilities.

Whether or not the avcs can continue to be drawn down in the receiving scheme will depend on whether the receiving scheme contains such a facility. If it does not, then the transferred AVC benefits must be secured by immediate annuity purchase.