RPSM15104090 - Technical Pages: Special annual allowance: Protected inputs - new and re-activated: Arrangements relating to an employment that are made in accordance with written agreements between the individual and employer made on or before 22 April 2009 or on or before 9 December 2009: Defined benefits and cash balance arrangements

This guidance only applies for the 2009-10 and 2010-11 tax years.

Arrangements relating to an employment that are made in accordance with written agreements between the individual and employer made on or before 22 April 2009 or on or after 9 December 2009

[Para 8 & 9 Sch 35 FA 09] [The Special Annual Allowance Charge (Protected Pension Input Amounts) Order 2010 - SI 2010/429] 

Defined benefits and cash balance arrangements

A pension input amount under a defined benefits arrangement or a cash balance arrangement that is set up on or after 22 April 2009 / on or after 9 December 2009 will be a protected pension input amount where the following conditions are met:

• the arrangement is under a pension scheme that is

• • an occupational pension scheme, or
  • a public service pension scheme;

• the individual began to accrue benefits under the arrangement during the period beginning on or after 22 April 2009 / on or after 9 December 2009 but before the ‘relevant end date’ and benefits continued to accrue until that end date, the relevant end date is

• • 5 April 2010, for the purpose of the 2009-2010 tax year, and
  • 5 April 2011, for the purpose of the 2010-2011 tax year, or
  • an earlier date in either the 2009-2010 or 2010-2011 tax year that the individual ceased to be an active member in relation to the arrangement;

• the arrangement was made in accordance with the terms of a written agreement between the individual and the employer;
• the written agreement between the individual and the employer was made no later than 22 April 2009 / 9 December 2009, and
• in the period beginning with the date on which benefits began to accrue under the arrangement and ending with the relevant end date, there has been no material change to the scheme rules under which the benefits to or in respect of the individual are calculated under the arrangement.

If, during the period beginning on the date when benefits began to accrue under the arrangement and ending with the relevant end date, there has been a material change to the scheme rules under which benefits to or in respect of the individual are calculated under the arrangement, the pension input to that arrangement following that change remains a protected pension input amount provided

• the material change that applies to the arrangement applies in the same way to at least 50 active members of the same pension scheme under which the arrangement is held.

Otherwise, only that part of the pension input amount under the arrangement that is not attributable to the material change will be a protected pension input amount.

A pension input amount that is protected under the conditions listed above does not include a pension input amount that is protected as a result of meeting the conditions for ‘relevant added years contributions’ or ‘relevant additional voluntary contributions’ (see RPSM15103170and RPSM15103410 respectively).

Where the above applies for a particular tax year in respect of an individual (because that individual’s relevant income is £130,000 or more for the tax year concerned), the references to 22 April 2009 apply in relation to an individual who has relevant income of £150,000 or more for 2009-2010. Otherwise the above would still apply but the references to 9 December 2009 apply instead (see RPSM15103025 for more details).