RPSM14101010 - Technical Pages: Transfers: Recognised transfers from registered pension schemes: Transfer to another registered pension scheme

Transfer to another registered pension scheme

A transfer from a registered pension scheme to another registered pension scheme is a "recognised transfer". A recognised transfer is a type of authorised payment. No tax charges or sanctions apply to recognised transfers.

Tax relief

A recognised transfer from one registered pension scheme to another is not a contribution, so no tax relief is due in respect of the transfer. The contributions to the transferring scheme would usually have received tax relief when originally made to that scheme, and the transfer is merely re-locating the pension rights represented by those contributions to a different registered pension scheme.

Annual allowance

The treatment of the value transferred for the purpose of the member's annual allowance calculation for the year in which the transfer takes place is as follows.

• Defined benefit arrangements -

• • Where the transferring scheme is one under which the member has a defined benefit arrangement, the amounts transferred, and the market values of any assets transferred in the pension input period are to be included in the member's closing value in the arrangement (so they are added back in at their values at the time of the transfer).
  • Where the receiving scheme is one under which the member has a defined benefit arrangement, the amounts transferred, and the market values of any assets transferred in the pension input period are to be deducted from the member's closing value in the arrangement (so they are subtracted at their values at the time of the transfer).

• Money purchase arrangement

• • cash balance arrangement, as for defined benefit arrangement, see above.
  • any other money purchase arrangement - the transfer is not a contribution (see above), so no tax relief is due and the transfer value is not to be included in the individual's annual allowance calculation for the receiving arrangement.

Lifetime allowance

A recognised transfer from one registered pension scheme to another is not a benefit crystallisation event for the purpose of applying the lifetime allowance. But if, for example, the transfer is of funds from which the member had not already started to draw benefits, there will be a benefit crystallisation event for the lifetime allowance when the benefits are taken in the receiving scheme.