RPSM12301100 - Scheme Administrator Pages: Information requirements and administration: Information the scheme administrator is required to provide to HMRC: The Event Report: Event number 8 - Pension commencement lump sum: primary and enhanced protection
Event number 8 - Pension commencement lump sum: primary and enhanced protection
[Reg. 3 The Registered Pension Schemes (Provision of Information) Regulations 2006 - SI 2006/567]
Reportable event
Reportable event 8 occurs when
- the scheme makes a pension commencement lump sum payment to a member and
- the amount of the payment is only an authorised payment because paragraphs 24 to 30 of Schedule 36 Finance Act 2004 apply (the member has enhanced protection and/or primary protection with protection of lump sum rights of more than £375,000) - see RPSM03105000.
Where a lump sum payment is made before the pension the scheme administrator will not initially know if the payment is a pension commencement lump sum, i.e. if it is paid in the allowable period of up to 6 months before the connected pension crystallises. The pension commencement lump sum crystallises (the member becomes entitled to it) immediately before the connected pension. So the tax year in which the pension commencement lump sum is paid may be different from the year from the tax year in which it crystallises. Where this happens, the test for whether or not the lump sum is reportable is made using the standard lifetime allowance for the tax year in which the pension commencement lump sum is paid.
Only pension commencement lump sums that are more than the standard permitted maximum for such a lump sum (see RPSM09104220) are reportable.
Example
Fiona has enhanced protection and a protected lump sum of 20%. In June 2008 she receives a pension commencement lump sum of £300,000 and a scheme pension with a crystallised value of £1.2 million. This lump sum is not reportable as it is not more than the standard permitted maximum for a pension commencement lump sum.
In March 2008 Fiona is paid a £200,000 pension commencement lump sum. In May 2009 she crystallises £800,000 as a lifetime annuity. This lump sum is reportable in 2008/09 as a reportable event 8 as in the tax year in which the lump was paid the £200,000 lump sum was more than the permitted maximum for a non protected pension commencement lump sum. This lump sum is only an authorised payment because Fiona has enhanced protection with protection of lump sum rights of more than £375,000.
The £200,000 pension commencement lump sum and £800,000 lifetime annuity both crystallise in 2009/10 when the standard lifetime allowance is £1.75 million. The £1.5 million Fiona crystallised in 2008/09 used up 90.9% of the standard lifetime allowance leaving just 9.1% (£136,500 in 2009/10) available standard lifetime allowance. This means that both BCE 6 for the pension commencement lump sum and the BCE 4 for the lifetime annuity are more than the standard lifetime allowance. These must be reported on the event report for 2009/10 under reportable event 6 - see RPSM12301080.
Information required
The information to be provided on the event report for reportable event 8 is
- the name of the member
- their National Insurance number
- the amount of the payment
- the date of payment and
- the reference number given by HM Revenue & Customs under the Registered Pension Schemes (Enhanced Lifetime Allowance) Regulations 2006 [SI 2006/131].
See RPSM12301295 for what to do if the individual does not give the scheme administrator their National Insurance number.
What the event report looks like on Pension Schemes Online
Having brought the event report summary page up, click on ‘Go to reportable fund movements’ on the right hand side of the screen. This brings up the following screen.
Event report page for reportable fund movements
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