Information and administration: information requirements when a member flexibly accesses their benefits: overview of the information requirements when a member flexibly accesses their benefits
When a member flexibly accesses benefits on or after 6 April 2015 they become subject to the money purchase annual allowance rules (see PTM056500).
The following events are classed as flexibly accessing benefits for these purposes:
- a member designating funds into a flexi-access drawdown fund when the first payment is made from that flexi-access drawdown fund;
- when a flexible drawdown pension fund is converted to a flexi-access drawdown fund on 6 April 2015;
- a member’s capped drawdown pension fund converting to a flexi-access drawdown fund under the same scheme at the member’s request (under paragraph 8C Schedule 28 Finance Act 2004) when the first payment is made from that flexi-access drawdown fund;
- a member’s capped drawdown pension fund converting to a flexi-access drawdown fund because the fund has paid out more than the annual maximum (under paragraph 8B Schedule 28 Finance Act 2004);
- a member’s capped drawdown pension fund converting to a flexi-access drawdown fund on a transfer at the member’s request (under paragraph 8D Schedule 28 Finance Act 2004) when the first payment is made from that flexi-access drawdown fund;
- the payment of an uncrystallised funds pension lump sum;
- the payment of a stand-alone lump sum on or after 6 April 2015 from a money purchase arrangement to a member who has primary protection with protected lump sums of more than £375,000;
- the member has a lifetime annuity that allows for flexible payments - see PTM056520;
- a member becoming entitled to a scheme pension under a money purchase arrangement on or after 6 April 2015 and at that time less than 11 other individuals had become entitled to the payment of a scheme pension or dependants’ scheme pension under the same scheme. (This doesn’t apply if the scheme is a deferred annuity contract.)
The list of flexible access events includes payments made from
- a qualifying recognised overseas pension scheme (QROPS) to which the member has transferred benefits, or
- an overseas pension scheme in respect of which UK tax relief has been given for benefits provided under the scheme in respect of the member (see PTM111100)
that if made from a registered pension scheme would be one of the payments listed above.
In certain circumstances a scheme administrator must provide the member with a pension savings statement setting out the member’s pension input amounts under the scheme - see PTM167100. If a member is subject to the money purchase annual allowance rules the pension savings statement must be prepared on a different basis - see PTM167200.
To enable scheme administrators to be aware of when, and on what basis, to prepare a pension savings statement there is a system of information exchange between scheme administrators, members and overseas pension scheme managers.
This system of exchanging information between members and schemes should ensure that the member is:
- aware that they may be liable to an annual allowance charge as a result of building up new benefits under a registered pension scheme or UK tax relieved overseas pension, and
- given enough information to notify HMRC of any liability to the annual allowance charge.
In broad terms when a flexible access event occurs, a scheme administrator or overseas scheme manager must give the member a flexible access statement. The member must then notify the other schemes that they belong to that they have received a flexible access statement.
When a transfer is made after the member has flexibly accessed their pension rights the transferring scheme administrator or scheme manager must tell the receiving scheme administrator or scheme manager that the member has flexibly accessed their pension rights.
If a member joins a new scheme after they have flexibly accessed their pension rights then unless they joined that scheme by transferring in existing pension rights the member must tell the new scheme administrator or manager that they have flexibly accessed their pension rights.
For guidance on:
- when a scheme administrator must issue a flexible access statement - see PTM166200
- when an overseas scheme manager must issue a flexible access statement - see PTM166300
- when a member must tell other schemes that have received a flexible access statement - see PTM166400
- what a member must do if they had flexible drawdown before 6 April 2015 - see PTM166500
- what a member must do if they have converted a capped drawdown pension to a flexi-access drawdown - see PTM166600
- when schemes should exchange flexible access information when making a transfer - see PTM166700