RPSM11103360 - Technical Pages: Lifetime allowance: The process for testing: In member's lifetime: Information from scheme: Annual member statement for a lifetime annuity or scheme pension from an insurance company

Providing an annual member statement on purchase of a lifetime annuity or scheme pension from an insurance company

The insurance company providing the lifetime annuity or scheme pension must provide the member with a statement every tax year (and every subsequent tax year up to and including the one in which the member reaches age 75) telling them the level of lifetime allowance that crystallised on the purchase of that annuity contract or scheme pension, and through any pension commencement lump sum paid that was linked to that annuity purchase or scheme pension. The statement must again express this as a percentage of the standard lifetime allowance - see RPSM11103330.

To enable them to do this, the scheme administrator must provide the insurance company with confirmation of the percentage of the standard lifetime allowance the member has used up in total under their scheme in relation to that annuity purchase. This will be through BCE 4 on the purchase of the annuity and BCE 6 on the payment of any linked pension commencement lump sum. The scheme administrator must provide this information to the insurance company within 3 months from the date the annuity contract or scheme pension was purchased.

The insurance company only takes on responsibility for sending the member an annual statement outlining the amount that crystallised through the purchase of the lifetime annuity contract (including any linked pension commencement lump sum) with them. The administrator of the purchasing scheme must still send the member a statement covering any amount that has crystallised in respect of them under the scheme, otherwise than through the purchase of that lifetime annuity (and any linked pension commencement lump sum).

Depending on the timing of the annuity purchase, the administrator of the purchasing scheme may need to send the member a statement in the tax year the annuity was purchased, covering the amount crystallising through BCE 4 (and BCE 6, where relevant) when the lifetime annuity was purchased. They will need to do this where the insurance company will not be able to provide the necessary statement to the member in that first tax year, within the required deadline, because of the timing of the purchase. If that is the case, the insurance company need only provide the ongoing statement in the tax years following the year the annuity was purchased. The statement provided by the scheme administrator should make it clear how much of the amount expressed on the statement relates to the purchase of the lifetime annuity contract (and any linked pension commencement lump sum), to ensure the member does not double count in future years.

RPSM11103370 and RPSM11103380 give some examples.

More information about the information to be supplied is given at RPSM12306010, and where the benefit originated from an unsecured pension fund, at RPSM12306002 and RPSM12306004.