New Pensions Taxation Regime: Members’ Existing Entitlements to Protection or to Enhanced Allowances – Template Member Declarations

Under the new pension taxation regime, beginning on April 6th, 2006, Scheme Administrators have three basic responsibilities when retirement benefits are paid to members:

  • to establish whether a chargeable amount arises on any benefit entitlement to the member
  • to account to HMRC for tax, known as the lifetime allowance charge, which arises on any chargeable amount.
  • to provide the member with a statement within three months of retirement confirming the amount of their lifetime allowance used up by the payment of their benefits and, if a chargeable amount has crystallised, a notice confirming the level of chargeable amount which arose, and the lifetime allowance charge due on this amount (and whether or not they have accounted for the tax charge, or intend to do so in due course).

To discharge their responsibilities Scheme Administrators will be required to obtain details of members’ existing entitlements to protection or to enhanced allowances.

The Scheme Administrator is jointly liable with the member for any lifetime allowance charge unless they can prove that they acted in “good faith” based on information provided by the member. Scheme Administrators will therefore require members to provide suitable declarations regarding the information they provide.

Although many scheme sponsors have yet to make changes to their schemes to accommodate the new regime, Administrators will already find that they are having to issue benefit quotations now for post A-day events, due either to the constraints of the current disclosure regulations or to member requests.

To assist Administrators in obtaining the necessary information, the SPC Administration Committee has produced two template member declaration forms. To obtain the forms please click on the icons below. The first of these forms is the Protection and Lifetime Allowance Enhancement Statement. This form has been designed to be prepopulated by the Scheme Administrator with information held on the scheme database. The second form is the Details of Benefits From Other Registered Schemes or Overseas Transfers Form, which is designed to obtain information from the member regarding other benefit crystallisation events, which have occurred, or will have occurred, before the impending event under the current scheme.

Scheme Administrators are free to use these forms in their current form or to adapt them in designing their own bespoke member declarations.