Today the Revenue published Pensions Updates 134 and 135, the first Updates to appear since 5 July 2002. Update No 134 applies to occupational pension schemes, especially SSASs, and explains recent changes to the Information Powers Regs SI 1995/3103 (see previous Aries news item). As noted earlier, the main impact of the amendments is on reporting of transfers.

From today, there is no longer any need (normally*) to obtain prior agreement from IR SPSS for a SSAS transfer, unless the value of the transfer is £250,000 or more (either on its own or when added to any other transfer payment made from or to the same scheme, for the same member, in the previous 364 days). When the new Regs 11A and 11B come into force on 6.4.03, there will be no need at all (normally*) to obtain prior agreement. Cases involving £250,000+ as above will instead have to be notified to IR SPSS on form PS 7050, within 28 days after the transfer.

* transfers before scheme approval [PNs 10.24(h), 10.25], transfers to schemes with conditional approval [PN 10.24(i)], overseas transfers [PNs 10.39, 10.40], and bulk transfers [PN 10.36] continue to require prior clearance from IR SPSS and the new Regs make no changes to these requirements.

Pensions Update No 135 illustrates the special circumstances in which IR SPSS will permit payment of a second tax-free lump sum from an occupational scheme or buy-out contract, as exceptions to the usual rule that TFC can only be paid once (ie when a pension first becomes payable). Examples (subject also to scheme rules permitting) are:

1. at the time of the initial TFC was paid, the GMP could not be established with certainty, so the trustees erred on the side of caution in calculating the lump sum (see PN 7.29];
2. the member’s final remuneration could not be precisely established (see NB2 to definition of FR in PN Glossary];
3. winding-up is under way and trustees cannot precisely establish the value of assets and liabilities for all years (see PSO Update No 40];
4. following a ruling from a court, Employment Tribunal, Pensions Ombudsman, etc that benefits were calculated illegally (see PSO Update No 27);
5. reinstatement of pension rights following personal pension mis-selling (see PSO Update No 21 para 21);
6. an employee who has taken benefits is subsequently granted backdated membership relating to part-time service (this is new practice and replaces the previous ban on additional lump sums in such cases, set out in Pensions Update No 131 para 13)

In the following circumstances too, an additional lump sum may be paid but it must be taxed:

7. a pension in payment is commuted for triviality (see PNs 8.14 and 14.8);
8. backdated increases are awarded to a pension in payment and the arrears of pension are paid in lump sum form.

Additional lump sums may be paid from Personal Pensions and Retirement Annuity Contracts in the following circumstances:

1. personal pension mis-selling is determined and benefits are already in payment;
2. to comply with a ruling as in d) above.

Genuine miscalculations may be rectified without a further payment counting as a second lump sum. This can only be done once for any member, and where the member was a controlling director of a sponsoring employer or a member of any personal pension scheme, prior written authority must be obtained from the APSS Pension Compliance section of IR SPSS.

IR 12 has been updated on the Revenue website in line with these changes to Revenue practice. The following PNs have been modified:

Update No 134

1.10, 10.22, 10.24, 16.6, 16.8, 16.9, 16.16a to 16.16c, 20.49, Appendix VII, Index

Update No 135

8.2, 8.2A, 10.47, Index