Stand-out Q – enhanced protection…

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FRI, 24 MAR 2017

Our Technical Hub provides access to a wide range of pension tax and trust technical resources. Every now and then we post tweets covering stand out questions from our technical content and our answers in case others might also find them helpful. As Twitter’s character restrictions only allow for the bare bones of the Q&A we link to the details here, too.

Question:

Is enhanced protection lost on transfer from a final salary scheme to a SIPP?

Answer:

It depends on the outcome of the test for relevant benefit accrual.

Where relevant benefit accrual occurs enhanced protection is lost. The test for relevant benefit accrual under a final salary scheme is done at the time of a benefit crystallisation event or on transfer to an other money purchase type arrangement e.g. a SIPP. Where it is carried out on transfer, the transfer value is compared to the appropriate limit. If the transfer value is more than the appropriate limit relevant benefit accrual is deemed to have occurred.

The appropriate limit is the greater of two values. PTM092430 gives more detail.

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