RPSM12303030 - Scheme Administrator Pages: Information Requirements and Administration: Information the scheme administrator is required to provide to the scheme member: Crystallised benefits and benefit crystallisation events - statement to member

[Reg 14 The Registered Pension Schemes (Provision of Information) Regulations 2006 - SI 2006/567 as amended by The Registered Pension Schemes (Provision of Information)(Amendment) Regulations 2008 - SI 2008/720]

The scheme administrator must provide the member with a statement showing the percentage of the standard lifetime allowance expended by benefit crystallisation events. The information that the statement must contain is set out below.

When the statement must be provided

The scheme administrator must give the member a statement

• at least once every tax year up to and including the tax year in which the member reaches the age of 75 where the member has an actual entitlement to be paid a pension. Although not required to do so, the scheme administrator may of course choose to continue providing annual statements beyond the tax year in which the member reaches age 75,
• at least once every tax year up to and including the tax year in which the member exhausts the funds held in a flexible drawdown arrangement where this happens before the tax year in which the member reaches age 75, or
• within 3 months of a benefit crystallisation event in respect of the member, including where a BCE 3 occurs and an annual statement is no longer being provided in the circumstances set out in the first bullet point.

The scheme administrator is not required to provide a statement within 3 months of a benefit crystallisation event if a statement is required under

• regulation 14(1)(a) - where the member has become entitled to a pension (see above), or
• regulation 8(2) - information from the scheme administrator to personal representatives on payment of either a defined benefits lump sum death benefit or an uncrystallised funds lump sum death benefit paid where the member died before reaching 75- see RPSM12304010.

Where this information is not provided the scheme administrator may be liable to a penalty - see RPSM04301080.

HMRC will not normally seek to raise a penalty where the scheme administrator has not been able to provide the statement to the member in the tax year in which the benefit crystallisation occurs as long as the member is provided with the statement within 3 months of the BCE.

There is no requirement to provide a statement to the member

• if a statement containing the same information is required to be provided by an insurance company under regulation 16, 17 or 17A - see RPSM12306004, RPSM12306020 and RPSM12306040, or
• in relation to a relevant existing pension (see RPSM11104910) to which an individual had an actual (as opposed to prospective) entitlement on 5 April 2006.

Where the first benefit crystallisation event in respect of the member triggers a 'deemed BCE' under Article 28 of The Taxation of Pension Schemes (Transitional Provisions) Order 2006 - SI 2006/572 (see RPSM09104542), a reporting requirement arises in respect of that 'deemed BCE'. The scheme administrator for the scheme in which the 'deemed BCE' occurs must provide a statement to the member in respect of the 'deemed BCE', within 3 months of the actual BCE which triggered it.

Information required on the statement to the member

The statement has to show the percentage of the standard lifetime allowance expended by the following benefit crystallisation events

• the member’s benefit crystallisation events in respect of the scheme to the extent that the sums or assets subject to any such BCE have not been transferred to another registered pension scheme, and
• where the scheme has received (directly or through earlier transfers) a transfer in respect of the member, any benefit crystallisation event, prior to the transfer, in connection with the sums or assets represented by the transfer, including ongoing investments from sums or assets represented by the transfer.

The percentage expressed on the statement should go to two decimal places (i.e. 25.55%). This should be a rounded down figure, so 25.558% becomes 25.55%.

Details of how to calculate the percentage of standard lifetime allowance expended on the happening of a benefit crystallisation event can be found on page RPSM12303040. Note that there are special provisions for individuals with fixed protection (see RPSM11101500 for more information about fixed protection).

A pension commencement lump sum can be paid up to 12 months after the entitlement to the connected pension arises. The maximum allowable amount of pension commencement lump sum is linked to the value of the pension that the member becomes entitled to. From 6 April 2011, a pension commencement lump sum can be paid after age 75 but there is no BCE 6 in such cases, including those where the member’s entitlement to the lump sum was in respect of a money purchase arrangement and arose before they reached age 75 (see RPSM11104730).

Where the pension commencement lump sum has not been paid before the statement to the member is required the scheme administrator may not know the value of the BCE in respect of the pension commencement lump sum. However the scheme administrator will know the approximate amount that is planned to be paid by the scheme. This is the amount that should be used when calculating the percentage of standard lifetime allowance to be shown on the statement. If the final amount of pension commencement lump sum is different from the amount originally intended to be paid an amended statement can be made to the member.

Substitute P60s

An option for scheme administrators is to provide this information to members by including the figure on form P60 substitute issued annually to members in receipt of a pension. Any scheme administrator wishing to adapt form P60 substitute for this purpose should first contact.

The Substitute Forms Officer
HM Revenue & Customs
Room 57
1^st Floor New Wing
Somerset House
Strand
London
WC2R 1LB

Where the scheme uses a substitute P60 to provide the annual statement and the P60 is provided in time (currently by 31 May following the end of the relevant tax year) HMRC will not normally seek to raise a penalty because an annual statement has not been provided for a tax year. In effect HMRC will regard the P60 as delivering the annual statement in time for the tax to which the P60 relates. For example an individual has a set of BCEs on 11 March 2008. The first BCE statement is issued by the scheme administrator on 28 March 2008, i.e. in the tax year 2007/08. Due to payroll timing the first pension payment is not made until the next tax year and so there is no requirement for a P60 for 2007/08. The scheme uses substitute P60s to provide the annual statement and the P60 (including the annual BCE statement) for 2008/09 is delivered to the member on 30 April 2009. The P60 has been delivered within the P60 delivery time limit and so although no annual statement has been delivered to the member in 2008/09 no penalty will be raised as the substitute P60 with the annual statement has been given to the member by 31 May 2009.