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HMRC internal manual

Pensions Tax Manual

General principles: arrangements: what is meant by an arrangement


Glossary  PTM000001


What is meant by an arrangement
Multiple arrangements
Drawing benefits

What is meant by an arrangement

Section 152 Finance Act 2004

The general concept of an arrangement is fundamental to the tax rules for registered pension schemes. The pension rules and lump sum rule work at the level of an individual’s arrangement under a registered pension schemerather than at a scheme or member level. (Although there are some exceptions where particular lump sum benefits are being paid.) The same applies when dealing with the death benefit rules.

An “arrangement” is any contract, agreement or arrangement for the purposes of which a scheme holds sums and assets relating to an individual member, and under which benefits are provided. A member may have more than one arrangement under a scheme and an individual arrangement cannot be made under more than one registered pension scheme.

Multiple arrangements

Whilst an arrangement must be held in a single scheme, there are no limits on how many arrangements a member can hold under a registered pension scheme. In some schemes the member’s fund may be broken up into many separate arrangements and in others there may only be one.

An arrangement is a concept inherited from the old personal pension scheme tax legislation. Before 6 April 2006, many personal pension schemes routinely structured a member’s fund under the scheme by splitting these funds between multiple arrangements in order to give the member maximum flexibility over when they drew benefits. Occupational pension schemes that provide defined benefits are less likely to have a multiple arrangement structure given the nature of benefit provision under such schemes. However, if the scheme provides mixed benefits, for example it provides defined benefit final salary accrual but money purchase benefits in relation to member contributions, those different benefit entitlements are treated as accruing in separate arrangements for tax purposes.

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Drawing benefits

Sections 165 and 166 Finance Act 2004

The member may draw benefits from each arrangement independently of any other arrangements they hold within the same scheme (subject to the pension rules and lump sum rule).


Jane is a member of a registered pension scheme with benefits accruing through six arrangements within that scheme. When Jane is 60 she decides to start working part-time. To supplement her income she decides to draw benefits from two of the arrangements she holds in the scheme, leaving the remaining four arrangements untouched. Provided the scheme rules contain the necessary enabling provisions, she is entitled to do this.

It is also possible for benefits to be drawn from only a proportion of the funds held within a single arrangement.