RPSM03106130 - Technical Pages: Protecting pension rights from tax charges: Taking benefits before normal minimum pension age: Transfer of employer - conditions

Transfers before 6 April 2006 as a result of a corporate sale/transfer of undertakings: conditions

The conditions that must be met for an individual to have a protected pension age after a transfer between pension schemes following a transfer of undertakings (see RPSM03106120) are as follows.

Conditions for the original pension scheme making the transfer

On 10 December 2006 the original scheme must have been either 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 the scheme must have contained provisions that gave the individual the right to take benefits before normal minimum pension age, or would have given the individual that right if they had been a scheme member on that date.

Conditions for the new scheme receiving the transfer

On 6 April 2006 the new scheme is deemed to be a registered pension scheme by paragraph 1(1) Schedule 36 and before that date the scheme was either a retirement benefits scheme, a deferred annuity contract (section 32 policy) used to secure benefits provided by a retirement benefits scheme or a Parliamentary scheme or fund mentioned in s613(4)(b) to (d) ICTA 1988.

At the time of the transfer of undertaking (or the final transfer if there had been more than one transfer of undertakings) the new scheme contains provisions giving the individual the right to take benefits before normal minimum pension age.

Conditions on the transfer(s) of undertaking(s)

Between 10 December 2003 and 5 April 2006 (inclusive) there was a (or more than one) transfer of an undertaking or part of an undertaking to which by the Transfer of Undertakings (Protection of Employment) Regulations 1981 applied.

The individual ceased to be employed by the old employer and became employed by the new employer by virtue of each transfer of undertakings.

The first transferring (old) employer was an employer in relation to the original pension scheme and the individual was a member of that scheme immediately before they became employed by the new employer following the first transfer of undertakings.

If there is more than one transfer of undertakings

• From the time the individual became employed by the new employer, following the first transfer of undertakings, they are a member of a pension scheme ‘run’ by the new employer. The individual continues to be a member of a pension scheme run by the employer until they become employed by the next new employer following the second (or any subsequent) transfer of undertakings
• On a second (or subsequent) transfer of undertakings the individual ceases to be employed by the previous employer and becomes employed by the new employer. From the time the individual becomes employed by the second (or subsequent) new employer they are a member of a pension scheme ’run’ by the new employer until they cease to be employed as a result of the final transfer of undertakings.

On the final or only transfer of undertakings

• From the date the individual becomes employed by the new employer the individual is a member of a pension scheme run by the employer or a member of the new pension scheme that receives the transfer of assets from the original pension scheme.
• All the individual’s accrued rights in the original pension scheme are transferred to the new pension scheme as a result of the transfer(s) of undertaking