Adviser > Individual > Drawdown > Tax-free cash (TFC)
Tax-free cash (TFC)
Why can't my client take his protected TFC from his existing provider and transfer the remainder to pay income drawdown?
This is only possible if the ceding scheme is an income drawdown plan.
If the client is not entitled to take income withdrawal from the drawdown pension fund under the existing scheme, then funds have not been made available for the payment of a relevant pension under that scheme. Any lump sum paid will not be TFC but an unauthorised payment and subject to a tax charge.
Is it possible to receive more than 25% of the plan as TFC?
Some members of Occupational Pension Schemes, Section 32 policies or deferred annuity contracts will have an entitlement to more than 25% TFC. If a decision is made to transfer these benefits, in most circumstances this enhanced entitlement to TFC will be lost.
In special circumstances, the entitlement can be maintained on transfer. For more details on these special circumstances, visit our guidelines on Tax-free cash protection on transfer.
For professional advisers only
