RPSM03106110 - Technical Pages: Protecting pension rights from tax charges: Taking benefits before normal minimum pension age: Pre 6 April 2006 transfer - scheme restructuring

Transfers as part of a scheme reorganisation during the period 10 December 2003 to 5 April 2006

[Articles 9 - 12 & 2 - 3 The Pension Schemes (Transfers, Reorganisations and Winding Up)(Transitional Provisions) Order 2006 - SI 2006/573]

Where an individual transfers benefits out of a retirement benefits scheme after 10 December 2003 normally the individual would lose the right to a protected pension age. However where an individual changes pension scheme because an employer reorganises their pension schemes the individual will be entitled to a protected pension age if all the following conditions are met.

• The transfer of the individual's rights under the scheme occurred in the period beginning 10 December 2003 and ending 5 April 2006, and the transfer is made
• as a single transaction of the member’s rights to the receiving scheme,
• as a single transaction of the member’s non contracted-out rights to the receiving scheme,
• as two transactions made up of the transfer of the member’s non contracted-out rights and a separate transfer of the member’s contracted out rights made to the same receiving scheme, or
• as two transactions made up of the transfer of the member’s non contracted-out rights to one pension scheme and a separate transfer of the member’s contracted out rights made to another scheme.
• The transferring scheme was either a scheme approved for the purposes of chapter 1 part 14 ICTA 1988 or a relevant statutory scheme as defined by s611A ICTA 1988 on 10 December 2003 and the scheme rules either
• gave the member a right to take benefits before normal minimum pension age, or
• would have given the individual the right to take benefits before the normal minimum pension age if the individual had been a member of the scheme on that date.
• The individual was either an active member or a deferred member of the transferring pension scheme immediately before the transfer was made.
• Immediately before and after the transfer the individual was either an employee or former employee of a sponsoring employer of the pension scheme receiving the transfer, or a former employee of a former sponsoring employer of the pension scheme making the transfer.
• The scheme(s) receiving the transfer(s) becomes a registered pension scheme on 6 April 2006 by virtue of paragraph 1(1) Schedule 36 and before that date was either
• a scheme approved for the purposes of chapter 1 part 14 ICTA 1988, or
• a relevant statutory scheme as defined by s611A ICTA 1988 or treated by HMRC as a relevant statutory scheme.
• The rules of the receiving scheme(s) at the time of the transfer gave individuals the right to take benefits before normal minimum pension age.

Where all these conditions are met the individual will have the right to a protected pension age of the later of

• the age of which the individual had the right to retire under the original transferring scheme, and
• the age of which the individual had the right to retire under the new receiving scheme

So if the individual had the right to take benefits at age 50 under the original scheme and at age 52 under the scheme that received the transfer the individual will have a protected pension age of 52 as a result of the transfer. However if the age at which benefits could be taken in the original scheme was age 52 and age 50 in the new pension scheme the individual will continue to have a protected pension age of 52 following the transfer as this is the later age.