Pension Schemes - Frequently Asked Questions
Question on Update no 102 (Prohibition on transactions between tax approved occupational pension schemes and non approved top up schemes)
- Paragraph 13 of Update 102 says that transactions between
approved and non-approved schemes that took place before the Update
was issued will be considered in the light of the Update which would
mean that such transactions might not be acceptable. Would this be so
even if prior Inland Revenue clearance had been given to a particular
transaction?
- Paragraph 11 of Update 102 says transactions of any description between any tax approved schemes and any non-approved schemes are prohibited. Please expand on this.
Q.
Paragraph 13 of
Update 102 says
that transactions
between approved
and non-approved
schemes that took
place before the
Update was issued
will be considered
in the light of
the Update which
would mean that
such transactions
might not be acceptable.
Would this be
so even if prior
Inland Revenue
clearance had
been given to
a particular transaction?
A. Where the trustees or pensioneer trustee or practitioner acting for an approved scheme, such as a small self-administered scheme, have/has received from the inland revenue in writing either general clearance or specific clearance for a transaction or transactions between an approved and non-approved scheme, then that written agreement will be honoured provided the transaction is not made after the issue of Update 102. This confirmation is given on the understanding that the facts and circumstances upon which the written clearance was given did not change between the time the clearance was given and the time of the actual transaction.
Q. Paragraph 11 of Update 102 says transactions of any description between any tax approved schemes and any non-approved schemes are prohibited. Please expand on this.
A. In the context of Update 102 the following are not prohibited:
- arrangements for the common use of the same administration and/or actuarial services by the trustees of an approved scheme and a "top up" FURBS (provided the approved scheme does not meet any part of the costs attributable to the FURBS);
- underwriting arrangements whereby the insurer of unapproved funded death in service benefits treats both schemes as one for underwriting purposes;
- an arrangement entered into when a member of an approved scheme is found to have benefits in excess of Revenue limits whereby his employer agrees to provide unapproved benefits equal to the excess in consideration of a contribution holiday under or a return of excess assets from the approved scheme;
- the independent purchase by the trustees of a FURBS of shares in a company in which the trustees of an approved scheme have a majority holding - eg some sort of private equity investment vehicle owned by approved scheme trustees;
- payment of
lump sum death
benefits by
the trustees
of an approved
scheme and trustees
of an unapproved
life assurance
scheme into
the same children's
trust.
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