Relevant annuity meaning

THIS CHECKLIST APPLIES TO TRUSTEES OF PRIVATE SECTOR DEFINED BENEFIT OCCUPATIONAL PENSION SCHEMES This Checklist has been archived. It summarises the actions DB trustees needed to take in the run-up to 6 April 2015, and afterwards, to accommodate the pension flexibilities (also called pension freedoms) introduced on 6 April 2015. For more about the nature of those reforms, see Practice Note: Pension freedoms—an introduction [Archived]. In this Checklist, ‘DB trustees’ denotes the trustees (or managers) of arrangements other than those providing flexible benefits, i.e. excluding: money purchase arrangements cash balance arrangements other arrangements that typically require an individual to buy an annuity Note that the additional voluntary contribution (AVC) facilities of defined benefit schemes do, in effect, amount to arrangements offering flexibilities. The issues set out in Pension flexibilities: steps for DC trustees to take—checklist [Archived] are therefore relevant to trustees of such schemes, but only to the extent that the AVC facilities are concerned. Preliminary steps ...

This Practice Note concentrates on the matters that applied prior to 6 April 2016—the date on which salary-related contracting-out (often called DB contracting-out) was brought to an end—when buying out these contracted-out salary-related (COSR) entitlements: guaranteed minimum pensions (GMPs)—the benefits built up by COSR scheme members as a result of contracting out between 6 April 1978 and 5 April 1997 Section 9(2B) rights (also referred to as post-1997 COSR rights)—the benefits accrued by COSR scheme members as a result of contracting out between 6 April 1997 and 5 April 2016 The legislative requirements that applied differed according to whether the relevant contracted-out rights were GMPs or Section 9(2B) rights. For guidance on the buy-out considerations from 6 April 2016 for Section 9(2B) rights and GMPs, see Practice Note: Buying out Section 9(2B) rights and GMPs from 6 April 2016. For general issues relating to buy-outs, see Practice Note: De-risking—pension buy-outs and buy-ins. For information on the ending of DB contracting-out on 6 April...

A pension transfer A pension transfer takes place when an individual’s rights under one pension scheme are moved to another. The ceding scheme passes the relevant assets to the receiving scheme, which then assumes responsibility for providing the benefits for the person concerned. Members of all UK registered pension schemes that are personal pension schemes have an overriding statutory entitlement to transfer the cash equivalent of their benefits to another pension arrangement, subject to meeting certain prescribed conditions. Many personal pension schemes also allow transfers out in wider situations than those giving rise to the statutory right, for example: partial transfers transfers of benefits that are in drawdown transfers of particular assets in non-cash form In practice, it is crucial that transfers paid from personal pension schemes constitute a recognised transfer for HMRC purposes and do not inadvertently forfeit any tax-related protections or statuses the member may hold. Personal pension schemes can also receive transfers from other pension...

THIS PRACTICE NOTE APPLIES TO OCCUPATIONAL PENSION SCHEMES ONLY Under preservation law, a short service benefit is the pension entitlement that must be given to a member who leaves an occupational pension scheme before retirement, without any immediate pension being payable. Not every early leaver is entitled to have their pension rights preserved within the scheme itself. This Practice Note considers rights and choices open to early leavers who currently lack a short service benefit. For wider guidance on preserving benefits within schemes, see Practice Note: Early leavers—preservation for more detail. In this Practice Note, references to trustees also include the managers of a scheme. When will an early leaver be entitled to a short service benefit?...