Transfer payment definition

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Bulk transfers between occupational pension schemes—checklist

Bulk transfers between occupational pension schemes—checklist This Checklist summarises the key steps to follow when carrying out a bulk transfer of a group of members from one occupational pension scheme to another. Details of the laws and regulations relating to the making of such transfers are set out in Practice Note: Bulk transfers between occupational pension schemes—an introduction. Planning of bulk transfer • Trustees of the transferring and receiving schemes should satisfy themselves that the making of the bulk transfer in the form contemplated is, in their respective opinions, in the interest of their respective beneficiaries. • Consider whether bulk transfer would have adverse tax consequences for transferring members (eg potential loss of tax protections). • Reach ‘in principle’ agreement between trustees and employers of both transferring and receiving schemes on pursuing bulk transfer exercise. • Review governing provisions of both transferring and receiving schemes to confirm transfer of assets, liabilities and members can be made. Amend provisions if necessary and possible. • Check whether schemes’ benefit structures are compatible....

Pension scheme mergers—checklist

Pension scheme mergers—checklist Planning of merger • Reach “in principle” agreement between trustees and employers of both transferring and receiving schemes on pursuing merger exercise. • Review governing provisions of both transferring and receiving schemes to confirm transfer of assets, liabilities and members can be made. Amend provisions if necessary and possible. • Check whether schemes’ benefit structures are compatible. • Check whether contracted-out status of either scheme poses a problem. • Review respective funding positions of schemes and obtain actuarial advice. Check whether employer top-up payment required. • Agree how receiving scheme is to treat transferred past service rights (eg under separate section). • Agree nature of future pension provision, taking account of potential employment law issues. • Check whether member consent or consultation required. • Agree timetable for merger. Implementation of merger • Carry out consultation exercise if required by statute (SI 2006/349). • To minimise likelihood of successful challenge under employment law, consider seeking consent from transferring members in respect of: ◦ transfer of accrued rights (even...

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Protected rights before 6 April 2012 [Archived]

’Protected rights’ were the benefits which schemes contracted-out on a money purchase basis had to provide, before 6 April 2012, to contracted-out members in lieu of the state benefits foregone as a consequence of contracting-out. For more information on contracting-out, see Practice Note: What does ‘contracting-out’ mean for pension lawyers?Contracting-out on a money purchase basis (or DC contracting out) first became possible in April 1988, but was abolished on 6 April 2012. The abolition meant that, on and from 6 April 2012, it ceased to be possible to accrue protected rights and the statutory restrictions applicable to protected rights accrued before that date ceased to apply. In effect, this means that former protected rights can be treated as normal scheme benefits, save to the extent that the scheme rules provide otherwise. For more information, see Practice Note: Abolition of DC contracting out.Which schemes could contract out on a money purchase basis?Before 6 April 2012, protected rights could be provided by the following schemes:•contracted-out money purchase (COMP) schemes, including defined benefit...

Requirement for appropriate independent advice on DB to DC transfers

On 6 April 2015, pension freedoms were introduced allowing members with flexible benefits (essentially, money purchase benefits and cash balance benefits) to access their pension pots in more ways than before, including by way of drawdown or by taking one or more lump sums known as uncrystallised funds pension lump sums (UFPLSs).These pension freedoms do not apply to safeguarded benefits (essentially, defined benefits (DB) and other benefits that are not money purchase or cash balance).For further information on the pension freedoms, see Practice Note: Pension freedoms—an introduction.For further information on which benefits constitute a safeguarded benefit and which ones do not, see Practice Note: Flexible benefits vs safeguarded benefits.Safeguards introduced on 6 April 2015The government recognised that the appeal of the pension freedoms (in particular the ability to take one's pension pot in one or more UFPLSs) might have led to an increase in transfer-out requests from members with safeguarded benefits to flexible benefit schemes. The government was concerned that such transfer outs could have a detrimental impact not only...

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Precedent Defined Benefit (DB) Transfer Form

Precedent Defined Benefit (DB) Transfer Form [ ] PENSION SCHEME REQUEST FOR TRANSFER OF BENEFITS Name:_______________________________________ Date of Birth: __________________________________ Membership Number:___________________________ National Insurance Number: _____________________ Company Name: ______________________________ Address:______________________________________ Date of Joining the Scheme: _______________________ Date of Leaving: ________________________________ To the Trustees of the [ ] Pension Scheme (the ‘Scheme’). I hold benefits in the Scheme and I wish to apply to transfer the value of those benefits from the Scheme as set out below. This includes any benefits which would be payable from the Scheme to my dependants or beneficiaries in the event of my death. I confirm that I have received a statement of entitlement in respect of my benefits in the Scheme which shows the cash equivalent transfer value (CETV) of my benefits as at my guarantee date. I wish to transfer my benefits to the following Receiving Arrangement(s): Name of Receiving Arrangement:___________________________________ Address of Receiving Arrangement:___________________________________ HMRC Registration Number:_______________________________________ DECLARATIONS Decision to transfer out • The decision I have made to...

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No recalculation of pension benefits for claims made outside relevant redress period (Mr S, CAS-59986–N3Z2)

Pensions analysis: In the determination of Mr S, CAS-59986–N3Z2, the Pensions Ombudsman (PO) has rejected a complaint brought about the calculation of a transfer payment to include a training allowance as part of the member’s pensionable pay following a later court decision holding that training allowances were pensionable. The PO determined that it was reasonable to apply a six-year limitation period for claims, so complainant’s active pensionable service did not fall within the relevant redress period. Martin Scott of gunnercooke LLP looks at the decision.

Delay to pension transfer within statutory deadline was reasonable due to need for additional due diligence (Mr N, CAS-57256-T1V5)

The Deputy Pensions Ombudsman (DPO) has rejected a complaint about a delay in the payment of a transfer value, finding that the delay was within the statutory six-month deadline and was not unreasonable. Martin Scott of gunnercooke LLP looks at the decision.