Beta This part of GOV.UK is being rebuilt – find out what this means

HMRC internal manual

Pensions Tax Manual

From
HM Revenue & Customs
Updated
, see all updates

Transfers: Information requirements in respect of a transfer

Glossary PTM000001
   

 

Scheme administrators are required to send an annual BCE statement to the member in accordance with PTM164400. When part or all of a transfer to another registered pension scheme or insurance company represents member benefits in payment information about the benefit crystallisation events (BCEs) needs to be passed to the new scheme administrator or insurer.

Where a dependant’s, nominee’s or successor’s flexi-access drawdown fund or dependants’ drawdown pension fund is transferred between pension schemes information may also need to be passed on to the receiving scheme administrator.

Transfer of member’s pension to another registered pension scheme
Transfer from a registered pension scheme to an insurance company
Transfer from one insurance company to another
Transferring dependants’, nominees’ or successors’ pensions
Transfer to a qualifying recognised overseas pension scheme (QROPS)
Penalties for late notification and incorrect notifications

Transfer of member’s pension to another registered pension scheme

Member has flexibly accessed their pension rights

Regulation 14ZC The Registered Pension Schemes (Provision of Information) Regulations 2006 – SI 2006/567

If a scheme administrator has reason to believe that the member has first flexibly accessed their pension rights before the transfer they must provide information about this to the scheme administrator of the receiving scheme.

PTM056520 explains which events are classed as flexibly accessing pension rights and when a member first flexibly accesses their pension rights.

PTM166700 provides guidance on what information must be provided to the receiving scheme administrator and when it must be provided.

Transfer of pension in payment

Regulation 15 The Registered Pension Schemes (Provision of Information) Regulations 2006 – SI 2006/567

The transferring scheme administrator must give the receiving scheme administrator a statement of the percentage of standard lifetime allowance used up by the pension being transferred. This information must be provided within three months of the transfer.

The statement of standard lifetime allowance used up should include details of:

  • any BCEs that occurred under the scheme in respect of the pension and any pension commencement lump sum paid in connection with the pension that is being transferred
  • where the pension in payment was itself transferred into the scheme any BCE that occurred before that transfer in respect of the transferred pension (and any connected pension commencement lump sum).

Following the transfer the receiving scheme administrator will become responsible for providing the annual BCE statement in accordance with PTM164400.

PTM164400 also provides guidance on how to calculate the percentage of standard lifetime allowance used up. Note that there are special rules for members with fixed protection, fixed protection 2014 and individual protection 2014.

Example

Anna has crystallised a pension and connected pension commencement lump sum (PCLS) under scheme A using up 10 per cent of the standard lifetime allowance. Anna transfers her scheme A pension to scheme B.

Scheme administrator A tells scheme administrator B that the transferred rights have used up 10 per cent of the standard lifetime allowance. Anna already has a pension in payment from scheme B that when crystallised, with the connected PCLS, used up 25 per cent of the standard lifetime allowance. Scheme administrator B now gives Anna an annual BCE statement showing 35 per cent of the standard lifetime allowance has been used up.

Later all Anna’s benefit are transferred to scheme C. Scheme administrator B tells scheme administrator C that the rights transferred have used up 35 per cent of the standard lifetime allowance (the 10 per cent crystallised under scheme A and the 25 per cent crystallised under scheme B). Scheme administrator C provides Anna with an annual BCE statement showing 35 per cent of the standard lifetime allowance has been used.

Top of page

Transfer from a registered pension scheme to an insurance company

An insurance company paying a scheme pension or lifetime annuity following a transfer of funds from a registered pension scheme the insurer must provide an annual BCE statement.

To enable insurance companies to do this, within three months of the transfer the scheme administrator must provide the insurer with the information about the percentage of standard lifetime allowance used up by the transferred rights. PTM164400 provides guidance on how to calculate the percentage of standard lifetime allowance used up. Note that there are special rules for members with fixed protection, fixed protection 2014 and individual protection 2014.

The information that scheme administrator must provide will vary depending on where the transferred funds derived from.

Sums and assets do not come from a drawdown pension fund or flexi-access drawdown fund

Regulation 16 The Registered Pension Schemes (Provision of Information) Regulations 2006 – SI 2006/567

Within three months of the transfer the scheme administrator must provide a statement of the percentage of the standard lifetime allowance used up by any BCE that occurred in relation to the pension and any connected pension commencement lump sum.

If no BCE occurred in respect of the pension, for example because the pension started before 6 April 2006, there is no requirement on the scheme administrator to pass on information to the insurance company.

The insurance company is then responsible for giving the member a BCE statement each year in line with PTM164500.

Funds derive from only part of a drawdown pension fund or flexi-access drawdown fund

Regulation 17 The Registered Pension Schemes (Provision of Information) Regulations 2006 – SI 2006/567

Within three months of the transfer the scheme administrator must provide a statement of the percentage of the standard lifetime allowance used up by the member becoming entitled to the scheme pension or lifetime annuity.

The insurance company is then responsible for providing an annual BCE statement to the member in accordance with PTM164500.

All of the remaining member’s drawdown pension fund or flexi-access drawdown fund is given to the insurance company

Regulation 17 The Registered Pension Schemes (Provision of Information) Regulations 2006 – SI 2006/567

Within three months of the transfer the scheme administrator must provide a statement of the percentage of the standard lifetime allowance calculated in accordance with regulation 17(5). This is the percentage of the standard lifetime allowance used up by all BCEs in respect of the member that have occurred under the scheme, or in respect of funds and assets transferred into the scheme, but not including details referable to:

  • sums and assets that were previously transferred on to another registered pension scheme;
  • sums and assets retained within the pension scheme;
  • where sums and assets (not from a member’s drawdown pension fund or flexi-access drawdown fund) have been provided to an insurance company to secure payment of a lifetime annuity or scheme pension and the insurance company has been given details of the percentage of standard lifetime allowance used up by the transferred funds;
  • where part of a drawdown pension fund or flexi-access drawdown fund has been used to secure a lifetime annuity or scheme pension and the insurance company has been given details of the percentage of standard lifetime allowance used up by the provision of the lifetime annuity or scheme pension.

Following the transfer the insurance company must provide an annual BCE statement to the member in accordance with PTM164500.

Top of page

Transfer from one insurance company to another

Regulation 17A The Registered Pension Schemes (Provision of Information) Regulations 2006 – SI 2006/567

Where an insurance company paying either a scheme pension or lifetime annuity

  • was required to give the member an annual BCE statement, and
  • transfers funds to another insurance company to provide a replacement scheme pension or lifetime

they must pass information on to the new insurer.

The original insurance company must give the new insurance company information about the percentage of standard lifetime allowance used up by the pension within three months of the transfer. See PTM164400 for guidance on how to calculate the percentage of standard lifetime allowance used up. Remember that if a member has fixed protection, fixed protection 2014 or individual protection this will affect the calculation.

After the transfer the new insurance company becomes responsible for providing an annual BCE statement in respect of the transferred pension or annuity in accordance with PTM164500.

Information required where the pension or annuity did not originate from a drawdown pension fund or flexi-access drawdown fund

The original insurance company must tell the new insurer the percentage of standard lifetime allowance used up by the scheme pension or lifetime annuity and any connected pension commencement lump sum.

Information required where the original funds derived from a drawdown pension fund or flexi-access drawdown fund

The information required to be passed between insurance companies depends on the nature of the annual BCE statement being provided to the member. This depends on whether the scheme pension or lifetime annuity was provided from part of a drawdown fund or from all the remaining drawdown fund.

Where only part of the drawdown fund was used to provide the pension or annuity the required information is the percentage of the standard lifetime allowance used up by the member becoming entitled to the scheme pension or lifetime annuity.

If all the member’s drawdown fund was used to provide the pension or annuity the required information is the same as that provided under the annual BCE statement provided by the original insurance company - see PTM164500 the section ‘Whole drawdown fund used to provide the scheme pension or lifetime annuity’

Top of page

Transferring dependants’, nominees’ or successors’ pensions

Certain beneficiaries’ pensions may not be taxable.  If sums and assets representing these pensions are transferred to another registered pension scheme or between insurance companies certain information must be transferred between the relevant parties.

Transfer of drawdown funds

Regulation 15ZA The Registered Pension Schemes (Provision of Information) Regulations 2006 – SI 2006/567

If sums and assets representing a

  • dependant’s drawdown pension fund
  • dependant’s flexi-access drawdown fund
  • nominee’s flexi-access drawdown fund, or
  • successor’s flexi-access drawdown fund

are transferred between registered pension schemes the receiving scheme administrator needs to know whether or not the new pension to be paid from their scheme is taxable.

Within three months of the transfer, the transferring scheme administrator must give the new scheme administrator the following information:

  • what type of drawdown pension was paid from their scheme, i.e. which of the four type of drawdown fund listed above generated the pension;
  • whether or not a successor has been nominated in respect of the drawdown fund and the name and address of any individual nominated as a successor;
  • if the transfer represents a dependant’s drawdown pension fund, dependant’s flexi-access drawdown fund, or a nominee’s flexi-access drawdown fund the age of the member when they died;
  • if the transfer represents a successor’s flexi-access drawdown fund the age of the immediately preceding dependant, nominee or successor, when they died;
  • if the member or immediately preceding dependant, nominee or successor (as appropriate) was aged under 75 when they died

    • Confirmation as to whether or not the pension is tax free under section 579CZA(1) or (2) Income Tax (Earnings and Pensions) Act 2003 (ITEPA), and
    • If the pension is taxable confirmation as to which section of ITEPA (either 579CZA(4), (5) or (6)) applies to the pension.

Where a scheme receives a transfer of funds that represent any of these types of pension the scheme administrator should assume that the pension is taxable unless they have received the required information from the transferring scheme administrator and this indicates that the pension may be paid tax-free.

Transfer of beneficiaries’ annuities

Regulation 17B The Registered Pension Schemes (Provision of Information) Regulations 2006 – SI 2006/567

If funds representing:

  • a beneficiaries’ annuity, or
  • a lifetime annuity that is continuing in payment after the member’s death for the remainder of a guaranteed period

are transferred between insurance companies, the new insurer providing the replacement annuity needs to know if that annuity is taxable.  Within three months of the transfer, the transferring insurer must give the new insurance company the following information:

  • what type of annuity the insurer was paying;
  • where the transfer represents a guaranteed lifetime annuity, a dependants’ annuity or a nominees’ annuity, the member’s age when they died;
  • for a transfer that represented a successors’ annuity, the age of the immediately preceding dependant, nominee or successor, when they died;
  • if the member or immediately preceding dependant, nominee or successor (as appropriate) was aged under 75 when they died, confirmation as to whether or not the pension is tax-free under section 646B(1) to (4) ITEPA 2003, giving details of the relevant section.

Where an insurance company receives a transfer of funds that represent any of these types of pension, the insurer should assume that the pension is taxable unless they have received the required information from the transferring scheme administrator and this indicates that the pension may be paid tax-free.

Transfer of short-term annuities

Regulation 17C The Registered Pension Schemes (Provision of Information) Regulations 2006 – SI 2006/567

If funds representing a beneficiaries’ short-term annuity are transferred between insurance companies, the new insurer providing the replacement short-term annuity needs to know if the annuity is taxable.  Within three months of the transfer, the transferring insurer must give the new insurance company the following information:

  • what type of beneficiaries’ short-term annuity they were paying, i.e. dependants’, nominees’ or successors’;
  • for a transfer of dependants’ or nominees’ short-term annuity, the age of the member when they died;
  • for a transfer of successors’ short-term annuity, the age of the immediately preceding dependant, nominee or successor, when they died;
  • if the member or immediately preceding dependant, nominee or successor (as appropriate) was aged under 75 when they died, confirmation as to whether or not the pension is tax-free under section 646C(1) or (2) ITEPA, giving details of the relevant section.

Where an insurance company receives a transfer of funds that represent any of these types of pension, the insurer should assume that the pension is taxable unless they have received the required information from the transferring scheme administrator and this indicates that the pension may be paid tax-free.

Top of page

Transfer to a qualifying recognised overseas pension scheme (QROPS)

PTM102000 and PTM103000 provide guidance on the specific requirements for both members and scheme administrators in respect of transfers to a qualifying recognised overseas pension scheme (QROPS).

Top of page

Penalties for late notification and incorrect notifications

All the notifications detailed above are covered by penalties under section 98 Taxes Management Act 1970. PTM160800 outlines the penalties due under this provision.