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HMRC internal manual

Pensions Tax Manual

HM Revenue & Customs
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Other authorised payments: authorised employer payments: what are authorised employer payments?

Glossary PTM000001

Payments to employers
Authorised employer payments

Payments to employers

The sponsoring employer is permitted to enter into most transactions with a registered pension scheme, provided the transactions are on an arm’s length commercial basis. An example is the purchasing or selling of an asset to or from the pension scheme - see PTM144000. Restrictions on this general rule include:

  • limits on investments in shares in a sponsoring employer (PTM122000), and
  • loans (PTM123200)

The rules governing payments made by a registered pension scheme to sponsoring employers are referred to as the authorised employer payments. Any payment to a sponsoring employer made outside of these rules is an unauthorised employer payment - see PTM132000.

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Authorised employer payments

Section 175 Finance Act 2004

Authorised employer payments are payments made to or in respect of sponsoring employers or former sponsoring employers as follows:

  • public service scheme payments (see below)
  • authorised surplus payments - see PTM145200
  • compensation payments (see below)
  • authorised employer loans - see PTM123200
  • scheme administration employer payments - see PTM144000, and
  • any other payment prescribed by Regulations made by HMRC. (None currently)

Public service scheme payments

Section 176 Finance Act 2004

Any payment made to or in respect of a sponsoring employer, or former sponsoring employer, from a public service pension scheme is authorised unless it has been specifically prescribed by Regulations as not being a public service scheme payment.

Compensation payments

Section 178 Finance Act 2004

A compensation payment is authorised when it is made from a registered pension scheme to a sponsoring employer to satisfy a liability the member has to a sponsoring employer. This can only be where the liability arises from a criminal, fraudulent or negligent act (or omission) of the member.

Note - though such a compensation payment is an authorised payment as far as a sponsoring employer is concerned the same payment is likely to be an unauthorised member payment in respect of the member concerned. If so the member would be liable to the unauthorised payments charge and, if applicable, the unauthorised payments surcharge. However, the scheme sanction charge would not apply - see PTM135200