PTM166300 - Information and administration: information requirements when a member flexibly accesses their benefits: information overseas scheme managers must give to a member when they flexibly access benefits
Glossary PTM000001
When the scheme manager must provide a flexible access statement
When the scheme manager doesn’t have to provide a flexible access statement
What the flexible access statement must contain
Paragraphs 9ZA and 9ZB Schedule 34 Finance Act 2004
Regulation 3AA The Pension Schemes (Information Requirements for Qualifying Overseas Pension Schemes, Qualifying Recognised Overseas Pension Schemes and Corresponding Relief) Regulations 2006 - SI 2006/208
When the scheme manager must provide a flexible access statement
The scheme manager of a qualifying recognised overseas pension scheme (QROPS) or former QROPS must give the member a flexible access statement within 91 days beginning with the date of one of the following ‘relevant events’:
- a qualifying payment is made from a flexi-access drawdown fund created from funds designated on or after 6 April 2015,
- at the start of 6 April 2015 if the member had the flexible drawdown pension fund before 6 April 2015
- a qualifying payment is made from a flexi-access drawdown fund that was created by the conversion of the member capped drawdown pension fund at the member’s request
- where a payment is made from a capped drawdown pension fund that is more than the annual capped drawdown limit and so converts the fund into flexi-access drawdown
- the payment of an uncrystallised funds pension lump sum.
The member must also have been either:
- UK resident when the relevant event occurred
- was UK resident in any one of the previous 5 tax years.
Note that where the relevant event is a qualifying payment this is an ongoing test. For example, if a member takes payments of income withdrawal from their flexi-access drawdown fund over a 6-year period. For the first 5 years of payments the member had not been UK resident for over 10 years and so the scheme manager does not have to provide a flexible access statement. However, in payment year 6 the member has returned to the UK. As a UK resident receiving a qualifying payment from a flexi-access drawdown fund, the requirement to provide a flexible access statement has now been triggered.
Terms such as ‘flexi-access drawdown fund’ that are normally defined by reference to payments made by a registered pension scheme should be read as the overseas equivalent. For example, a payment that if made from a registered pension scheme would be an uncrystallised funds pension lump sum is an uncrystallised funds pension lump sum for the purpose of this page of the guidance.
A ‘qualifying payment’ is a payment of either income withdrawal or short-term annuity.
Where the whole flexi-access drawdown fund is made up of rights attributable to a disqualifying pension credit the payment from the fund is not a ‘relevant event’ and so no flexible access statement is required. A disqualifying pension credit is a pension credit that derives from crystallised funds.
When the scheme manager doesn’t have to provide a flexible access statement
The scheme manager doesn’t have to give the member a flexible access statement in the following circumstances:
- they have already given the member a flexible access statement in relation to an earlier ‘relevant event’ under the scheme,
- the member has told them that they have previously flexibly accessed their pension rights
- another scheme manager has told them that the member has already flexibly accessed their pension rights
- a registered pension scheme administrator has told them that the member has already flexibly accessed their pension rights and
- if the member has exhausted their relevant transfer fund (see PTM113230) and has never been a currently-relieved member of the scheme (see PTM113310).
What the flexible access statement must contain
HMRC will not be prescriptive about the precise wording of the information given to the member on the flexible access statement. However, for tax years 2017-18 onwards, it must contain the following information; that:
- the member has flexibly accessed their pension rights and the date of the relevant event
- if in any tax year the member’s total pension inputs into money purchase arrangements and certain hybrid arrangements is more than £4,000
- they will be liable to an annual allowance charge on the excess amount over £4,000, and
- their annual allowance for pension inputs under other types of arrangements will be reduced by £4,000
- the member has a duty to pass on information to scheme administrators of registered pension scheme and scheme managers of QROPS and former QROPS, describing the circumstances in which the member must pass on that information, what information has to be passed on and the relevant time limits. (PTM166400 provides guidance on when a member must pass on information about receiving a flexible access statement.)
If the member was paid an uncrystallised funds pension lump sum the statement must also tell the member that they may be liable to a tax charge under section 636A(1A) or (1B) Income Tax (Earnings and Pensions) Act 2003 by virtue of paragraph 1(3)(da) of schedule 34 Finance Act 2004.
Tax years 2015-16 and 2016-17
The information that must be provided in flexible access statements issued during tax years 2015-16 and 2016-17 is the same as described immediately above for statements issued during tax years 2017-18 onwards, except that each reference to ‘£4,000’ is replaced with ‘£10,000’.