RPSM13100550 - Technical Pages: International: Enhancement: Recognised overseas scheme transfer factor: Example 1 of defined benefits arrangement relevant relievable amount

Example 1 of calculating the relevant relievable amount for a defined benefits arrangement

Shona transferred £1.13 million from her recognised overseas pension scheme defined benefits arrangement to a registered pension scheme on 6 June 2010.

Shona went to work in Germany and joined her recognised overseas pension scheme defined benefits arrangement on 6 May 2002. She returned to work in the UK on 6 May 2007 and so became someone who is not a relevant overseas individual with effect from 6 April 2007. Her pension entitlement as at 6 April 2007 was £40,000 p.a. Shona had an option under the rules of the recognised overseas pension scheme defined benefits arrangement to commute part of her pension entitlement for a lump sum on retirement. She was not entitled to a separate lump sum.

£40,000 x 20 = £800,000

Shona ceased to accrue benefits under the defined benefits arrangement on 6 May 2009. That was before she made the transfer and before she ceased to be someone who is not a relevant overseas individual. Her pension entitlement as at 6 May 2009 was £56,500 p.a.

£56,500 x 20 = £1.13 million

The defined benefits relevant relievable amount is therefore £330,000 (£1.13 million - £800,000)