Chapter PTM107000

CourtHM Revenue & Customs
Published date27 March 2015
Record NumberPTM107000
Glossary PTM000001

Section 169(1A) to (1C), paragraphs 2(6A) and 16(2A) to (2C) Schedule 28 Finance Act 2004

Regulations 3 to 5 and 8 to 9 The Registered Pension Schemes (Transfer of Sums and Assets) Regulation 2006 - SI 2006/499

A scheme pension (or dependants’ scheme pension) may be payable direct from a registered pension scheme or by an insurance company on behalf of the registered pension scheme. Such a scheme pension can be transferred to another pension scheme or another insurance company. Alternatively a registered pension scheme may transfer funds to an insurance company to provide a scheme pension (or dependants’ scheme pension) outside of the pension scheme, for example to secure a member’s benefit when a scheme is winding-up.

Transfer must be on a like for like basis
Tax treatment of scheme pension after the transfer
Tax treatment of dependants’ scheme pension after transfer

Transfer must be on a like for like basis

The transfer of sums and assets representing a scheme pension must be used to provide a scheme pension following the transfer. If this does not happen the transfer is not a recognised transfer. The pension scheme will have made an unauthorised payment.

A transfer of sums and assets representing a dependants’ scheme pension must be used to provide a dependants’ scheme pension following the transfer. Where a new dependants’ scheme pension is not provided:

  • if the transfer is from a scheme the transfer is not a recognised transfer and so the transfer is an unauthorised payment, or
  • if the transfer is from one insurance company to another the pension scheme that provided the sums and assets to purchase the dependants’ scheme pension is treated as having made an unauthorised payment.

The transfer must relate to all the member’s or dependant’s scheme pension. A transfer from a scheme that represents only part of the entitlement to the scheme pension will not be a recognised transfer.

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Tax treatment of scheme pension after the transfer

If the transfer is made on like for like basis as described above then for certain purposes the new scheme pension is treated as if it were the original scheme pension.

No BCE 2 and pension commencement lump sum

The member becoming entitled to a scheme pension provided by the new scheme or insurance company will not be a BCE 2. The member also can’t become entitled to a pension commencement lump sum because of the transfer. For both purposes the new scheme pension is...

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