Laura made a valid claim for primary protection and lump sum
rights of £400,000 on 5 April 2006.
In January 2007, she took a lump sum of £300,000 and a
lifetime annuity purchased for £400,000 from
Scheme 1 having shown the
scheme administrator evidence of her protected
lump sum rights. The balance of her protected lump sum rights was
£100,000.
In March 2007, Laura took benefits from Scheme 2. She told
the scheme administrator that she had already taken benefits valued
at £700,000 from another scheme, but did not say that she had
protected pension and lump sum rights. Her rights in Scheme 2, a
money purchase scheme, were worth £800,000.
On the basis of the information supplied the scheme administrator
offered to pay benefits in the form of a lifetime annuity purchased
for £600,000 plus a lump sum of £200,000. Laura agreed
and took the benefits.
Laura was entitled to take the balance of her protected lump
sum, £100,000, from Scheme 2 free of tax, but by taking
£200,000 she has received an
unauthorised member payment of £100,000.
Laura is liable to tax at 40% on the unauthorised payment. However,
paragraph 30 of Schedule 36 Finance Act 2004 ensures that the
scheme administrator of Scheme 2 is not liable to the scheme
sanction charge.
| Glossary ( RPSM20000000) |
