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This publication is available at https://www.gov.uk/government/publications/pensions-schemes-artificial-surplus-spotlight-3/spotlight-3-pensions-schemes-artificial-surplus
HM Revenue and Customs is aware of schemes that purport to enable a member of a registered pension scheme to remove funds from the scheme tax-free.
This involves contriving to create a funding surplus through the surrender of rights by a member. They sometimes involve cases where provision is made under a separate unconnected trust for the surviving spouse or other dependants of the member.
The following will be regarded as an unauthorised payment in respect of the member, and will attract tax charges on the member on the amount paid by the scheme administrator:
a surplus created by a reduction in liability, caused by a member surrendering rights in a scheme
the consequential payment made in these circumstances