A transfer of part of a member's pension rights in a registered pension scheme leaving the remaining rights in the scheme is a recognised transfer providing
It should be noted that, to qualify as a
pension commencement lump sum, such a payment must
be made in connection with entitlement to a relevant pension under
the same scheme. Such a pension will be a
scheme pension, or
unsecured pension. The transferring scheme should
take care not to pay a lump sum alone and then transfer the
remaining uncrystallised rights to another scheme without having
first created an entitlement to the relevant pension. That would
result in the lump sum being an unauthorised payment.
For example, a scheme member requests an unsecured pension but the scheme concerned does not offer the facility for such a pension. If another scheme does, and both schemes agree to a transfer, then all the uncrystallised rights may be transferred, and the receiving scheme may pay both a pension commencement lump sum and the unsecured pension.
Alternatively, the transferring scheme may pay both the lump sum and provide the entitlement to an unsecured pension. At a later date, the member requests a transfer of the unsecured pension fund to another scheme. The transferring scheme may then transfer the sums and assets of the unsecured pension fund to another scheme. The receiving scheme will then continue to provide the entitlement to an unsecured pension but will not pay a pension commencement lump sum (see RPSM14106050).