An individual may want to protect their existing pension and
lump sum rights as they stood on 5 April 2006 from the
lifetime allowance charge. If they do the
responsibility for notifying HMRC rests with the member of the
scheme. The member may approach the scheme for information to help
them establish whether tax charges may affect them.
The member may need
An individual may have a lump sum right greater than 25% of
their pension rights in a particular occupational pension scheme on
5 April 2006. The legislation automatically protects the
individual, allowing for the payment of the lump sum right that the
member had on 5 April 2006. However pension schemes do not have to
pay the maximum protected lump sum. Where this protection is given
the administrator can pay a lump sum to an individual above 25% of
their pension rights at a benefit crystallisation event, in
accordance with the scheme rules as they stood on 5 April 2006.
An
arrangement under a scheme may give a right to
take pension and lump sum benefits without the consent of the
employer or trustees before
normal minimum pension age. Where this is the case
the scheme can chose to honour this right any pay benefits from an
earlier age than normal minimum pension age. (There is however no
protection for members of
personal pension schemes unless the individual had
the right to the payment of a pension before age 50.)
An individual may have a right on 5 April 2006 to the payment
of a lump sum death benefit under a five year guarantee under the
scheme rules as they stood on 5 April 2006. Such a payment can be
made tax free after 5 April 2006.
| Glossary ( RPSM20000000) |
