Transfers where members have protection explained

Some clients have scheme-specific protection for benefits built up before A-Day, allowing them to access more than 25% of their pension fund tax-free or retire earlier. These protections are usually lost on transfer, except through a block transfer.

As part of our Bitesize Technical series, Senior Technical Consultant Joshua Croft explains the rules around transfers where members hold protection.

Key Insights on transfers where members have protection

For a transfer to qualify as a block transfer, three key conditions must be satisfied. Firstly, at least two members must transfer from the same pension scheme to the same receiving scheme. One member can have protection while the other does not, as long as they transfer together.

Secondly, all sums and assets for the transferring members must be part of a single transfer request. While the assets don’t have to move on the same day, they must be included in one instruction. Partial transfers are not eligible for block transfer status.

Thirdly, none of the members involved can have been in the receiving scheme for more than 12 months before the transfer is completed.

It’s also important to note that single-member schemes, such as retirement annuity contracts or Section 32 policies, are not eligible for block transfers, as the absence of a second member prevents them from meeting the requirements.

More Bitesize Technical

Want to snack on another technical insight? Start from the beginning of our latest series on death benefits, here.

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