Chapter PTM100010

Published date27 March 2015
Record NumberPTM100010
CourtHM Revenue & Customs
IssuerHM Revenue & Customs
Glossary PTM000001

What is a transfer?
What is a recognised transfer?
Statutory right to transfer
Where benefits can be transferred to
When can benefits be transferred?
The date of transfer
Member exercises cancellation rights in a ‘cooling-off’ period
Form of transferred rights
Transfers must be made between pension schemes
Tax treatment of a transfer
Partial Transfers

What is a transfer?

A transfer is the movement of an individual’s pension rights from one scheme to another. The transferred funds become subject to the rules of the receiving pension scheme and that scheme then becomes responsible for paying the member’s benefits.

There are number of reasons why a member’s pension savings may be transferred to or from a registered pension scheme; here are just a few:

  • the pension scheme is being wound up
  • the member is no longer employed by the employer that set up that scheme, and wants all benefits to be provided under their new employer’s pension scheme
  • the member wants to transfer to a pension scheme that has a different range of pension payment options. For example their existing scheme only pays pension as a lifetime annuity whilst the proposed new scheme also allows pensions to be paid as a flexi-access drawdown.
  • an ex-spouse or former civil partner has been given a pension credit under a pension sharing order and wants to transfer it to a different pension scheme.

Pension rights can be transferred to another pension scheme without unauthorised payments tax charges if the transfer is a recognised transfer.

What is a recognised transfer?

Section 169 Finance Act 2004

For a transfer to another pension scheme to be a recognised transfer the transferring funds must:

  1. become held for the purposes of the receiving scheme providing benefits in respect of the transferring member, and
  2. be transferred to either another registered pension scheme or a qualifying recognised overseas pension scheme.

The definition of a registered pension scheme includes a deferred annuity contract.

A transfer of funds from a registered pension scheme to an insurance company will be a recognised transfer if those funds had been used by the pension scheme to provide either a scheme pension or dependants’ scheme pension.

A transfer from a registered pension scheme to a

  • vehicle that is a not a pension scheme
  • UK pension scheme that is not a registered pension scheme, or
  • non-UK scheme that is neither a registered pension scheme nor a qualifying recognised overseas pension scheme

is not a recognised transfer. The transfer will be an unauthorised payment - see PTM130000.

If the transfer includes a transfer of a pension in payment extra conditions apply. If these conditions - see PTM104000 to PTM107000 - are not met the transfer will not be a recognised transfer. For the avoidance of doubt a pension in payment includes funds designated by a member or beneficiary into a drawdown pension fund or flexi-access drawdown...

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