RPSM11102040 - Technical Pages: Lifetime allowance: When you test for the lifetime allowance: The effective date of a BCE

 [s165(3)][s166(2)] [The Registered Pension Schemes (Authorised Payments) Regulations 2009 SI 2009 No 1171] 

For BCE 1 the date of the BCE is the date the funds are designated as being available to provide the member with drawdown (before 6 April 2011 unsecured) pension (or before 6 April 2011 were deemed to have been so designated immediately before the member reached age 75 - see RPSM11104100).

For BCEs 2, 3, 4 and 6 the date the BCE is triggered will be the date the member acquires an actual (as opposed to a prospective) entitlement to payment of the relevant authorised pension benefit under the arrangement concerned. However, note that from 6 April 2011, there is no BCE 6 where entitlement to a pension commencement lump sum arises on or after that date and before the member reaches age 75 but the lump sum is not paid until after the member has reached age 75.

With BCE 5 the effective date of the BCE is the member’s 75^th birthday. Here the BCE is only testing the prospective entitlements the member holds under a defined benefits arrangement at that specific point in time.

With BCE 5A the effective date of the BCE is the member’s 75^th birthday. Here the BCE is only testing the net growth since the original designation of funds being available for drawdown (before 6 April 2011 unsecured) pension.

With BCE 5B the effective date of the BCE is the member’s 75^th birthday. Here the BCE is only testing any remaining unused funds held in a money purchase arrangement.

With BCE 7 the effective date of the BCE is the date the relevant lump sum death benefit is paid. But where more than one payment is made in respect of that member (from any registered pension scheme) each BCE is treated as occurring simultaneously immediately before the member’s death, solely for the purpose of comparing the amount crystallising at those BCEs with the individual’s available lifetime allowance - see RPSM11105520).

For BCE 8 the effective date of the BCE is the date the overseas transfer is made (see RPSM11104860 to see how to work out this date).

For BCE 9 the effective date of the BCE varies according to which regulation (of SI 2009/1171) brings it to apply:

• in the case of Regulations 16 and 19 BCE 9 is said to crystallise on the date of the member’s death (to be precise, it applies at the time immediately before the death of the member), and
• in the case of Regulations 17 and 18, BCE 9 is said to crystallise on the same date as the BCE 6 to which it is related.