RPSM09101090 - Technical Pages: Member benefits: A secured pension: Overview: Deferred annuity contract purchased on or after 6 April 2006

A deferred annuity contract purchased on or after 6 April 2006

If a registered pension scheme purchases a deferred annuity contract (a contract that does not provide for the immediate payment of benefits) on or after 6 April 2006 that contract is treated as having become a registered pension scheme at the point of purchase.

The benefits provided by that contract must fit within the authorised member pension or pension death benefit rules. If they don’t, payment of any pension benefit will be treated, and taxed, as an unauthorised member payment.

For example, a pension benefit ultimately provided by such a deferred annuity contract to a member will be an authorised pension benefit if the benefit provided by that contract is

• a scheme pension,
• a lifetime annuity,
• a drawdown pension, up to 6 April 2011 called an unsecured pension, or
• an alternatively secured pension, also renamed drawdown pension from 6 April 2011.

depending on the nature of the pension being provided under the terms of the contract and the nature of the arrangement benefits are secured from.

Whatever form of benefit is ultimately provided by the contract will crystallise for lifetime allowance purposes at the point benefits actually come into payment (so when an actual entitlement arises).