RPSM03104090 - Technical Pages:
Protecting pension rights from tax charges: Enhanced protection:
Cessation: Permitted transfers
Cessation of enhanced protection - permitted transfers
[Para 12(7) & (8) Sch 36] [Article 35 The Taxation of
Pension Schemes (Transitional Provisions) Order 2006 – SI
2006/572]
A transfer is a ’permitted transfer’ if
- all or part of the sums and assets or
pension rights under an
arrangement are transferred to form all or part of
the assets of one or more
other money purchase arrangements under a
registered pension scheme or
recognised overseas pension scheme. So any type of
arrangement may transfer to an other money purchase arrangement.
Pension rights may be transferred to other money purchase
arrangement under more than one scheme. This, for example, will
allow a transfer to a scheme that cannot accept
protected rights whilst at the same time
transferring the protected rights element to another scheme that is
contracted out and so can accept those rights;
- all or part of the sums and assets or
pension rights under a defined benefits or cash balance arrangement
are transferred to form all or part of the assets of a defined
benefits or
cash balance arrangement under a registered
pension scheme or recognised overseas pension scheme, but only
- where the transfer is made in connection with the
winding up of the original pension scheme containing the cash
balance or
defined benefits arrangement, and the receiving
cash balance or defined benefits arrangement relates to the same
employment as the transferring arrangement that is being wound up,
or
- where the transfer is made in connection with a
relevant business transfer - see
RPSM03104091, or
- where the transfer is made as part of a
retirement-benefit activities compliance exercise - see
RPSM03104091.
- sums and assets being used for the
provision of a scheme pension (crystallised benefits) are
transferred to an insurance company as a result of the winding up
of the transferring pension scheme;
- where defined benefit or cash balance
pension rights are transferred to a money purchase arrangement, the
value of the sums and assets received by the money purchase
arrangement are actuarially equivalent to the rights being
transferred.
Where a permitted transfer is made enhanced protection will not
be lost and all of the constraints relating to enhanced protection
apply equally to the arrangements to which the transfers are made.
A transfer to another scheme of rights for an
ex-spouse following a
pension sharing order may still be made. Such a
transfer does not affect the enhanced protection of the individual
whose rights are being reduced under the pension sharing order.
