RPSM09100177 - Technical Pages: Member benefits: Overview: Payments: Other transactions regarded as payments: retirement-benefit activities compliance exercise.

Retirement-benefit activities compliance exercise

For the purposes of the surrender provisions in RPSM09100172 a surrender relating to an arrangement under a registered pension scheme is made as part of a retirement-benefit activities compliance exercise if all of the conditions A to E set out below are met.

Condition A

The surrender is made in connection with the making of a new arrangement under another registered pension scheme relating to the member who is making or agreeing to the surrender.

Condition B

The original arrangement and the new arrangement relate to the same employment.

Condition C

Both the rights surrendered under the original arrangement and the rights conferred under the new arrangement consist of or include a prospective entitlement to authorised pension death benefits or authorised lump sum death benefits (or both).

See RPSM10100060 for guidance on what is an authorised pension death benefit and RPSM10100070 for guidance on what is an authorised lump sum death benefit.

Condition D

The surrender under the original arrangement and the making of the new arrangement constitute or form part of a transaction made for the purpose of securing that the activities of the original pension scheme are limited to retirement-benefit activities.

For the purposes of this condition retirement-benefit activities are defined in Section 255 Pensions Act 2004 or Article 232 of the Pensions (Northern Ireland) Order 2005.

Condition E

The rights surrendered under the original arrangement and the rights conferred under the new arrangement are not significantly different.

An example would be where an employer has an existing occupational pension scheme under which some members are only entitled to benefits in the event of their death (so the activities of the scheme are not limited to ‘retirement benefit activities’). The employer therefore terminates the arrangements under the existing scheme for the members with rights to death benefits only and sets up a new scheme providing only death in service benefits, which the relevant members are invited to join. Providing the replacement arrangements set up for the members under the new scheme provide the same level and type of benefits for them, those arrangements will be treated as having been created as part of a retirement- benefit activities compliance exercise.