A protected pension age is lost on transfer unless it's one of the following:
It means that no one else needs to agree to the individual’s request to take their pension benefits such as an employer or scheme trustee. More details can be found in HMRC's Pensions Tax Manual - PTM062210.
A protected pension age is lost if:
A block (or buddy) transfer has a number of conditions:
A wind-up transfer is a specific type of transfer. For a transfer to be treated as a winding-up transfer a number of conditions must apply:
If all of the above conditions are met then any protected pension age will be maintained under the new pension plan.
If a scheme with a protected pension age doesn’t offer drawdown, the individual has 2 choices:
HMRC Pension Tax Manual – PTM062220 tells you more about this.
As well as all the conditions explained above, the receiving scheme/insurer must be willing and able to accept the transfer.
An individual with a protected pension age of less than 50, taking their pension before they reach the normal minimum pension age, may have their lifetime allowance reduced. Give HMRC Pension Tax Manual – PTM082000 a read if you want to know more.
And if the individual has a reduced lifetime allowance, their maximum pension commencement lump sum will reduce to the lower of:
Check out these useful links to HMRC’s tax manuals:
HMRC Pensions Tax Manual - PTM062200 - Member benefits: pensions: protected pension age: contents
HMRC Pension Tax Manual – PTM062220 – Member benefits: pensions: protected pension age: personal pensions and RACs – right to take benefits before age 50
HMRC Pensions Tax Manual - PTM062205 - Member benefits: pensions: protected pension age: basic principles
HMRC Pensions Tax Manual - PTM062240 - Member benefits: pensions: protected pension age: right to keep a protected pension age after transfers or winding-ups
HMRC Pension Tax Manual – PTM082000 – The lifetime allowance and the lifetime allowance charge: reduced lifetime allowance
HMRC Pension Tax Manual – PTM063250 – Member Benefits: lump sums: Pension commencement lump sum (PCLS): available portion.
HMRC Pension Tax Manual – PTM063240 - Member Benefits: lump sums: Pension commencement lump sum (PCLS): applicable amount.
The information provided is based on our current understanding of the relevant legislation and regulations and may be subject to alteration as a result of changes in legislation or practice. Also it may not reflect the options available under a specific product which may not be as wide as legislations and regulations allow.
All references to taxation are based on our understanding of current taxation law and practice and may be affected by future changes in legislation and the individual circumstances of the investor.