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This ain't no wind-up
It's been almost three years in the making but finally, the amendment order we've all been waiting for has arrived.
Key points
- When a pension scheme is wound-up and policies assigned to members, any members who have rights to PCLS of more than 25% of the fund value or to a low minimum pension age can keep those rights.
- When a pension scheme is wound-up and policies assigned to members, any members who have rights to a Stand Alone Lump Sum can keep those rights.
- Accrued contracted-out rights in a pension scheme can be transferred in two separate transactions instead of a single transaction.
Since A-Day, pension commencement lump sum (PCLS) rights of over 25% of the scheme entitlement and/or the right to take benefits before the normal minimum pension age were lost when a policy was assigned to a scheme member. This was also the case even if that assignment was done as part of an occupational pension scheme wind-up.
The Pension Schemes (Transfers, Reorganisations and Winding Up) (transitional Provisions) (Amendment) Order 2010 changes all that...
With effect from 24 March 2010, and retrospectively back to the 6 April 2006, policies assigned to members as part of the wind-up of an occupational pension scheme will now be allowed to keep any PCLS entitlement of more than 25% and/or their right to take benefits before the normal minimum pension age.
The provisions of the Statutory Instrument apply only to occupational scheme wind-ups and not to scheme members that choose to have a policy assigned to them on leaving the service of their employer – in those circumstances the protection of the PCLS and/or pension age is lost.
The Statutory Instrument does introduce some other retrospective changes including:
- Extending transitional protection to cover situations where accrued contracted-out rights (Guaranteed Minimum Pensions (GMPs), Protected Rights, Section 9(2B) Rights) are transferred out of the original scheme in two separate transactions (it used to have to be done in one transaction).
- Stand Alone Lump Sums (SALS) (paid out with no connected pension) are given transitional protection in wind-up situations where a member’s right to a SALS is secured by the purchase or assignment of a policy to the member.
Published 11 March 2010
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