RPSM11103150 - Technical Pages: Lifetime allowance: The process for testing: In member's lifetime: At or before BCE: Further issues for the scheme administrator

Other issues the scheme administrator will need to consider in order to establish if a chargeable amount arises at a BCE

Before a BCE takes place the scheme administrator must also consider any choices the member may have over how they take their benefits under the scheme/arrangement. The member’s choice may alter the amount that crystallises for lifetime allowance purposes (as it may alter the resulting BCEs).

The benefits crystallising for lifetime allowance purposes will be the actual entitlements the member ends up with under the arrangement(s). The effective date of the BCEs will be the date the entitlements actually arise (not the point the scheme administrator first makes contact with the member) - see RPSM11102040.

For example, where all the funds under an arrangement are being designated to provide a drawdown (before 6 April 2011 unsecured) pension the amount crystallising will be the fund value at the point of designation. It will not be the fund value at the point the scheme administrator first wrote to the scheme member telling him his options under the scheme.

If a chargeable amount is likely to arise the member may want to change their options under the scheme. For example, the member may want to take any excess benefits crystallising as a lifetime allowance excess lump sum if the scheme allows this. Again this may change the balance of the amounts crystallising (and the level of chargeable amount arising).

For example, when crystallising a scheme pension, the actual level of lifetime allowance excess lump sum paid by the scheme in exchange for the excess scheme pension is unlikely to match the crystallised value of the excess pension given up - see RPSM11105060.