³ÉÈËÓ°Òô

View the related checklists about Authorised lump sum

Finance Act 2004—figures, rates and limits

Finance Act 2004—figures, rates and limits Annual allowance The annual allowance is the maximum amount by which the value of an individual’s pension savings across all the registered pension schemes of which they are a member may increase in any year without tax penalties arising. Employer contributions also count towards the annual allowance. Annual allowance figures are shown in the table below. The annual allowance charge is levied where the annual allowance is exceeded. For further information generally, see Practice Note: The annual allowance. Tax year Annual allowance (£) Source 2023/24 onwards £60,000, subject to:—tapering for individuals with an ‘adjusted income’ in excess of £260,000 p.a. and a ‘threshold income’ in excess of £200,000 p.a. Tapering will be a reduction of £1 for every £2 by which their income exceeds £260,000, subject to a maximum reduction of £50,000 for those with an adjusted income of £360,000 p.a. or more. In other words, the minimum tapered annual allowance is £10,000 (£60,000 – £50,000), and—money purchase annual allowance of...

View the related practice notes about Authorised lump sum

Death benefits—final salary schemes

THIS PRACTICE NOTE APPLIES ONLY TO REGISTERED FINAL SALARY OCCUPATIONAL PENSION SCHEMESMost pension schemes provide for benefits upon the death of the members. What those benefits will be depends on:•the type and terms of the scheme•the member’s status at death (ie active, deferred, pensioner), and•what death benefits HMRC permits as an authorised paymentThe scheme rules need to be checked carefully as flexible retirement (which allows members to receive benefits while remaining in active service) has introduced a myriad of benefit provisions into some schemes, with boundaries becoming blurred between the different types of member. For further information, see Practice Note: Flexible retirement.HMRC’s Pensions Tax Manual provides further guidance on the types of death benefit that may be paid from final salary schemes as an authorised payment. Unauthorised payments are subject to a punitive tax charge. For further information, see Practice Note: Authorised and unauthorised payments.Death as an active memberPensionIt is common for the rules of a final salary scheme to provide for a pension to be payable in the event...

Updating your rules to reflect A-day changes [Archived]

THIS PRACTICE NOTE APPLIES ONLY TO OCCUPATIONAL PENSION SCHEMESARCHIVED: This archived Practice Note considers the amendments that occupational pension schemes have made to their rules in order to reflect the changes to the pensions tax regime brought into force by the Finance Act 2004 from 6 April 2006 (A-day). It is not maintained and is for background information only. For further information on the A-day changes, see Practice Note: The Finance Act 2004, A-day and the pensions tax regime.A-day—an overviewThe Finance Act 2004 (FA 2004), which came into force on A-day, introduced a new, simplified regime for the taxation of pension schemes in the UK.Prior to A-day, pension schemes needed to be exempt approved by the Inland Revenue (now Her Majesty's Revenue and Customs (HMRC)) in order to benefit from favourable tax treatment. To qualify for and maintain exempt approved status, the maximum benefits that could be paid by schemes were restricted in accordance with limits set by HMRC (the HMRC Limits).For further information, see The pre A-day pensions tax...

View the related q&as about Authorised lump sum

If a member of a contracted-out scheme has died and is due arrears of payments to equalise for the effect of their unequal GMP what are the specific provisions of the Finance Act 2004 (or regulations made under it) by which the payment of such arrears would be considered an authorised payment? and; to whom such arrears can be paid as an authorised payment? Can such arrears be paid to someone other than the original member’s personal representatives?

If a member of a contracted-out scheme has died and is due arrears of payments to equalise for the effect of their unequal GMP what are the specific provisions of the Finance Act 2004 (or regulations made under it) by which the payment of such arrears would be considered an authorised payment? and; to whom such arrears can be paid as an authorised payment? Can such arrears be paid to someone other than the original member’s personal representatives? While Part 4 of the Finance Act 2004 states the broad rules under which authorised payments can and cannot be made by registered pension schemes, the Registered Pension Schemes (Authorised Payments) Regulations 2009, SI 2009/1171 provide for some exceptions to these rules. See the Registered Pension Schemes (Authorised Payments) Regulations 2009, SI 2009/1171, regs 3 and 4. In its GMP Newsletter (dated July 2020), HMRC confirms that, in circumstances where benefits need to be adjusted for GMP equalisation, the adjustments may be paid as an authorised lump sum following the death of...

In a scheme with salary sacrifice, what options are available to employers wanting to pay contribution refunds to early leavers with no short service benefit?

In a scheme with salary sacrifice, what options are available to employers wanting to pay contribution refunds to early leavers with no short service benefit? This Q&A assumes the scheme in question is an occupational pension scheme. No short service refund lump sum option Since A-day (6 April 2006), trustees of registered occupational pension schemes have been legally obliged to give early leavers with no right to a short service benefit but with at least three months' pensionable service, the right to choose between: • a refund of member contributions known as a 'short service refund lump sum'. This is a type of authorised member payment, and • a cash transfer sum. This is the cash equivalent of an early leaver's accrued benefits (taking account of both member and employer considerations), which can either be used to buy an annuity or paid into a registered pension scheme A short service refund lump sum is limited to the amount of contributions actually paid by a member. Even...

View the related News about Authorised lump sum

HMRC further updates Pensions Tax Manual to account for abolition of LTA

HMRC has made further updates to the Pensions Tax Manual on 4, 5 and 8 April 2024 to take account of the abolition of the lifetime allowance (LTA) from 6 April 2024.

Pensions weekly highlights—28 March 2024

This week's edition of Pensions weekly highlights includes a review of key news stories, as well as dates for your diary and trackers.