RPSM03104061 - Technical Pages: Protecting pension rights from tax charges: Enhanced protection: Pension credit

Receipt of a pension credit

If an individual receives a pension credit as a result of a pension sharing order after 5 April 2006 and the individual has enhanced protection the individual may lose enhanced protection as a result of receiving the pension credit. Whether or not this occurs depends on how the pension credit is received

Transfer to a new arrangement

If the pension credit is transferred into a new arrangement for the individual enhanced protection will be lost due to the setting up of a new arrangement – see RPSM03104095. The transfer of a pension credit is not a permitted transfer.

Transfer to an existing arrangement

If the pension credit is transferred into an existing other money purchase arrangement as this is not a relevant contribution (see RPSM03104510) the individual will not lose enhanced protection as a result of receiving the pension credit.

If the pension credit is transferred into an existing defined benefits or cash balance arrangement enhanced protection may be lost at a later stage if relevant benefit accrual occurs – see RPSM03104520.