Stand-out Q – protected tax free cash…

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TUE, 18 NOV 2014

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
An adviser called to say that a client has rights under a section 32 policy and the only way of taking income from it is via an annuity. The client also has scheme specific lump sum protection (entitlement to more than 25%) under the policy and that transferring to a SIPP would normally result in the protection being lost because the transfer would not be a block transfer. The reason for the client wanting to transfer to a SIPP is to access more options in the way that benefits can be drawn post 5 April 2015.

Answer
The relaxation in the definition of block transfer introduced in the Finance Act 2014 means that the client can transfer before 6 April 2015 and provided the rights under the SIPP are fully crystallised before 6 October 2015 the scheme specific lump sum protection will be retained under the SIPP.

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