RPSM03100080 - Technical Pages: Protecting pre 6/4/06 pensions rights from tax charges: Overview: Lump sums
Lump sum protection
|[Paras 24 - 30 and 31 - 34 Sch 36]|
Under the new tax rules a lump sum paid when an entitlement to a pension arises (a pension commencement lump sum) will be restricted to 25% of the value of the crystallising benefits. This is subject to a further restriction that total pension commencement lump sums can be no more than 25% of the standard lifetime allowance.
This mean that in 2006/07 under the normal rules total pension commencement lump sums cannot be more than £375,000.
Before 6 April some individuals will have had the right to
- total lump sums of more than £375,000, or/and
- the right to a lump sum from a particular pension scheme of more than 25% of the value of their pension rights under that scheme.
Protection is available for such individuals. RPSM03105000 provides more information on the protection of lump sum rights.