RPSM11103320 - Technical Pages: Lifetime allowance: The process for testing: In member's lifetime: Information from scheme: Statement given to the member after the BCE

The statement the scheme administrator must provide to the member after the BCE has taken place (or every tax year)

Where a pension entitlement arises under the scheme following the BCE

Where a pension is being paid to a member from a registered pension scheme the scheme administrator must provide that member with a statement every tax year confirming

• the total percentage of the standard lifetime allowance they have expended by BCEs in respect of the member under that scheme (under any BCE, both in that or earlier tax years, but not counting any BCEs that relate to rights that have been transferred out of the scheme), and
• include in this figure any amount that has crystallised previously in relation to that individual under another scheme, where the related benefits have subsequently been transferred into the scheme.

This may be done through a single statement or more than one statement issued to the member.

RPSM11103330 gives more information on how these statements should be expressed.

Where uncrystallised funds are designated under a money purchase arrangement to provide an unsecured pension a pension is deemed to be in payment for the purposes of providing a notice, whether or not a pension is actually drawn.

Passing on of obligation to provide a statement from the scheme administrator to an insurance company

Where a lifetime annuity or scheme pension is purchased from an insurance company, that company will take on responsibility for providing the member with an ongoing annual statement. This will show how much lifetime allowance was used up in relation to the annuity purchase (through BCE 4 in relation to the contract purchase, and BCE 6 if a pension commencement lump sum was paid in connection with that arising entitlement). RPSM11103360 explains how this works, and the legislative requirements imposed on the scheme administrator and the insurance company.

The position on transfers is discussed in RPSM11103390.

Where there is no pension under the scheme following the BCE

If a BCE occurs where there is no pension paid from the scheme, e.g. because a serious ill-health lump sum has been paid, or BCE 5 has occurred, a one-off statement giving the above information needs to be sent to the member within 3 months of the date of the BCE. This includes a pre 6 April 2006 lump sum relating to a deferred pension, and for which a BCE will occur on 6 April 2006 in accordance with article 28 of the Taxation of Pension Schemes (Transitional Provisions) Regulations 2006 (SI 2006/572). It should be noted that no lifetime charge will arise on such lump sums, but the amount will be using up lifetime allowance. Similarly, stand-alone lump sums paid on or after 6 April 2006 where there is no associated pension, as described in the above regulations as amended by the Taxation of Registered Pension Schemes (Transitional Provisions) (Amendment No2) Order 2006 (SI 2006/2004), should be the subject of a BCE statement. But where there is an entitlement to an unsecured pension, an annual statement should be provided even if no pension is being taken.

Where a chargeable amount is crystallised

The scheme administrator needs to provide a statement (in that and subsequent tax years, where a pension is in payment), even where a chargeable amount arises (and a notice as discussed on RPSM11103310 also needs to be provided). The statement and notice may be combined in that first tax year.

Penalties

If the scheme administrator fails to provide this notice to the member within the required deadline they will be liable to penalties - see RPSM12100020.