Pension rules, pre or post A Day?

If a pension matured pre A Day and is in deferment which rules will apply if the pension is backdated to a date prior to A Day. Is it the so called retrospective A Day rules or is it the rules that pertained prior to A Day?

Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
By 'deferment' do you mean that you are postponing taking the actual benefits, or have you received any money from the pension ?
The new rules use a term called 'crystallisation', which refers to the act of physically taking the benfits from a pension - so I'm not sure what you mean by 'pension is backdated' - either you have received payments from your pension scheme, or you haven't.
If you haven't physically taken any benefits from the plan yet, and the pre A-Day rules were more beneficial (i.e. above the lifetime limit, etc), then you can apply to protect these benefits from the changes until March 2009. Lump sum entitlements of greater than 25% of the fund value should be automatically protected.
All pensions now operate under the new rules. What I think you may mean by 'retrospective A Day rules' is the ability to protect pre A-Day benefits from the changes if they will be adversely affected. However, this is not the same as applying 'retrospective rules' - all it is doing is giving transitional protection to existing benefits.
Neil.
Stickems. wrote:

Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
No benefits have been taken. I want the post A-Day rules to apply, because they ignore the calculations, that limit the pension and the tax free cash to a percentage of final remuneration, which are in the pre A-Day rules. You say all pensions operate under the new rules. If a normal retirement date was in 2003 and the pension is backdated to 2003 can it be assumed that the pension will be calculated under the new rules and that it won't limit the tax free cash and the pension to percentages of final remuneration?
| By 'deferment' do you mean that you are postponing taking the actual | benefits, or have you received any money from the pension ? | | The new rules use a term called 'crystallisation', which refers to the | act of physically taking the benfits from a pension - so I'm not sure | what you mean by 'pension is backdated' - either you have received | payments from your pension scheme, or you haven't. | | If you haven't physically taken any benefits from the plan yet, and the | pre A-Day rules were more beneficial (i.e. above the lifetime limit, | etc), then you can apply to protect these benefits from the changes | until March 2009. Lump sum entitlements of greater than 25% of the fund | value should be automatically protected. | | All pensions now operate under the new rules. What I think you may mean | by 'retrospective A Day rules' is the ability to protect pre A-Day | benefits from the changes if they will be adversely affected. However, | this is not the same as applying 'retrospective rules' - all it is | doing is giving transitional protection to existing benefits. | | Neil. | | Stickems. wrote: | > If a pension matured pre A Day and is in deferment which rules will apply if | > the pension is backdated to a date prior to A Day. Is it the so called | > retrospective A Day rules or is it the rules that pertained prior to A Day? |
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
I think I follow what you are saying....
However, are you talking about a Final Salary scheme, or an Occupational Money Purchase scheme (such as an EPP) ?
What is important here is that you are taking the benefits now. The fact that your normal retirement date was in 2003 is irrelevant.
In a nutshell, if the post A-Day rules mean that you will enhance your benefits, then the new rules will apply. If you would be disadvantaged by the new rules, you can apply for protection.
Under an EPP, if your lump sum entitlement was, say, equivalent to 20% of the fund value, then you do nothing and get a lump sum of 25%.
However, if you are talking about a Final Salary scheme, things may not be any different, because the Trustees may not have changed the rules of the scheme.
The formula for calculating lump sums under Final Salary schemes that operate on an accrual rate of 1/60th per annum or lower has changed (this now often gives a higher lump sum entitlement). For more details, see http://www.invidion.co.uk/aday_final_salary_tax_free_cash_calculator.php
However, just because this has changed, it does not mean that the old scheme will enhance your benefits.
Remember, the new rules have changed the MAXIMUM benefits that can be taken. However, your scheme may pay out benefits based on their scheme rules that are less than the maximum, because that is what the scheme rules state.
I think you may need to provide a little more info about the exact type of pension scheme you were a member of, and how what the rules of the scheme permit.
Neil.
Stickems. wrote:

Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
The scheme is an EPP. So from your answer I gather that if a pension is backdated to before A-Day then the new rules will apply. O.K. that's what I wanted to hear, BUT, and it is a big but, where can I see an authoritative and clear written confirmation of this.
| > | By 'deferment' do you mean that you are postponing taking the actual | > | benefits, or have you received any money from the pension ? | > | | > | The new rules use a term called 'crystallisation', which refers to the | > | act of physically taking the benfits from a pension - so I'm not sure | > | what you mean by 'pension is backdated' - either you have received | > | payments from your pension scheme, or you haven't. | > | | > | If you haven't physically taken any benefits from the plan yet, and the | > | pre A-Day rules were more beneficial (i.e. above the lifetime limit, | > | etc), then you can apply to protect these benefits from the changes | > | until March 2009. Lump sum entitlements of greater than 25% of the fund | > | value should be automatically protected. | > | | > | All pensions now operate under the new rules. What I think you may mean | > | by 'retrospective A Day rules' is the ability to protect pre A-Day | > | benefits from the changes if they will be adversely affected. However, | > | this is not the same as applying 'retrospective rules' - all it is | > | doing is giving transitional protection to existing benefits. | > | | > | Neil. | > | | > | Stickems. wrote: | > | > If a pension matured pre A Day and is in deferment which rules will | > apply if | > | > the pension is backdated to a date prior to A Day. Is it the so called | > | > retrospective A Day rules or is it the rules that pertained prior to A | > Day? | > | |
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
You'll find the definitive rules on the Revenue website at:
http://www.hmrc.gov.uk/pensionschemes/
or call the HRMC Pension Schemes office in Nottingham, and they should be able to tell you.
The rules about 'years of service' are now effectivley redundant for EPP's. They are treated like any other money purchase scheme (such as personal pensions). The only thing you need to watch out for is the lifetime allowance - but taking 25% of the fund value of an EPP should pose absolutely no problem if you do it now.
Neil.
Stickems. wrote:

Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
I should have added a note to the above to the effect that you should check whether the rules of your scheme / the Trust Deed allows you to do this.
If not, you may have to ammend the scheme rules to be able to take a higher lump sum.
Also, if this is a one-man EPP, this may a good time to wind the scheme up.
The new rules that came in have meant that most insurance companies are no longer acting as scheme administrators, and have effectively dumped this responsibility back onto the scheme trustees.
This means that EPP Trustees will now be directly responsible for Pension Scheme reporting requirements, and will have to register their schemes with the Revenue directly. Failure do this could result in loss of tax approval for the scheme in question.
This will make running an EPP a real pain for most people in the future....
snipped-for-privacy@invidion.co.uk wrote:

Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
Shouldn't I wait till after all benefits have been taken before winding up? I spoke to the pensions office in Northampton and they agree with you but couldn't point to any printed reference in the rules. I had a look on the website but it is a dogs dinner, the nearest I could get to something pertinent was item 1. on http:www.hmrc.gov.uk/pensionschemes/pts.htm which is probably not pertinent enough.
| > > | > | By 'deferment' do you mean that you are postponing taking the actual | > > | > | benefits, or have you received any money from the pension ? | > > | > | | > > | > | The new rules use a term called 'crystallisation', which refers to the | > > | > | act of physically taking the benfits from a pension - so I'm not sure | > > | > | what you mean by 'pension is backdated' - either you have received | > > | > | payments from your pension scheme, or you haven't. | > > | > | | > > | > | If you haven't physically taken any benefits from the plan yet, and | > > the | > > | > | pre A-Day rules were more beneficial (i.e. above the lifetime limit, | > > | > | etc), then you can apply to protect these benefits from the changes | > > | > | until March 2009. Lump sum entitlements of greater than 25% of the | > > fund | > > | > | value should be automatically protected. | > > | > | | > > | > | All pensions now operate under the new rules. What I think you may | > > mean | > > | > | by 'retrospective A Day rules' is the ability to protect pre A-Day | > > | > | benefits from the changes if they will be adversely affected. However, | > > | > | this is not the same as applying 'retrospective rules' - all it is | > > | > | doing is giving transitional protection to existing benefits. | > > | > | | > > | > | Neil. | > > | > | | > > | > | Stickems. wrote: | > > | > | > If a pension matured pre A Day and is in deferment which rules will | > > | > apply if | > > | > | > the pension is backdated to a date prior to A Day. Is it the so | > > called | > > | > | > retrospective A Day rules or is it the rules that pertained prior to | > > A | > > | > Day? | > > | > | | > > | |
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
That link should be http://www.hmrc.gov.uk/pensionschemes/pts.htm
|| > > | > | By 'deferment' do you mean that you are postponing taking the | actual || > > | > | benefits, or have you received any money from the pension ? || > > | > | || > > | > | The new rules use a term called 'crystallisation', which refers | to the || > > | > | act of physically taking the benfits from a pension - so I'm not | sure || > > | > | what you mean by 'pension is backdated' - either you have | received || > > | > | payments from your pension scheme, or you haven't. || > > | > | || > > | > | If you haven't physically taken any benefits from the plan yet, | and || > > the || > > | > | pre A-Day rules were more beneficial (i.e. above the lifetime | limit, || > > | > | etc), then you can apply to protect these benefits from the | changes || > > | > | until March 2009. Lump sum entitlements of greater than 25% of | the || > > fund || > > | > | value should be automatically protected. || > > | > | || > > | > | All pensions now operate under the new rules. What I think you | may || > > mean || > > | > | by 'retrospective A Day rules' is the ability to protect pre | A-Day || > > | > | benefits from the changes if they will be adversely affected. | However, || > > | > | this is not the same as applying 'retrospective rules' - all it | is || > > | > | doing is giving transitional protection to existing benefits. || > > | > | || > > | > | Neil. || > > | > | || > > | > | Stickems. wrote: || > > | > | > If a pension matured pre A Day and is in deferment which rules | will || > > | > apply if || > > | > | > the pension is backdated to a date prior to A Day. Is it the | so || > > called || > > | > | > retrospective A Day rules or is it the rules that pertained | prior to || > > A || > > | > Day? || > > | > | || > > | || | |
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
OK, I could have phrased the last reply better, but yes, you should commence winding up the scheme after you have taken the benefits - what was going through my mind is the longer the leave it, the more chance you have of getting entangled in the new requirements.
The HMRC website is not the easiest site to navigate, but it does state on http:www.hmrc.gov.uk/pensionschemes/pts.htm in point 7:
"If your scheme rules allow, you can take up to 25% of your pension fund as a tax free lump sum."
All the other points seem quite straightforward. If you ask anybody who knows anything about pensions, they will confirm these points.
Therefore, why do you need this inscribed in stone ?
If you go to the EPP provider and ask for 25% of the fund as a lump sum, they will arrange it (scheme rules permitting). If this was not allowed, they would not give it to you.
So what is the big issue here ?
Neil.
Stickems. wrote:

Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
My providers says that the pension and the tax free cash has to be based on final remuneration if I backdate my pension to maturity in 2003.
| > || > > | > | By 'deferment' do you mean that you are postponing taking the | > | actual | > || > > | > | benefits, or have you received any money from the pension ? | > || > > | > | | > || > > | > | The new rules use a term called 'crystallisation', which refers | > | to the | > || > > | > | act of physically taking the benfits from a pension - so I'm | > not | > | sure | > || > > | > | what you mean by 'pension is backdated' - either you have | > | received | > || > > | > | payments from your pension scheme, or you haven't. | > || > > | > | | > || > > | > | If you haven't physically taken any benefits from the plan yet, | > | and | > || > > the | > || > > | > | pre A-Day rules were more beneficial (i.e. above the lifetime | > | limit, | > || > > | > | etc), then you can apply to protect these benefits from the | > | changes | > || > > | > | until March 2009. Lump sum entitlements of greater than 25% of | > | the | > || > > fund | > || > > | > | value should be automatically protected. | > || > > | > | | > || > > | > | All pensions now operate under the new rules. What I think you | > | may | > || > > mean | > || > > | > | by 'retrospective A Day rules' is the ability to protect pre | > | A-Day | > || > > | > | benefits from the changes if they will be adversely affected. | > | However, | > || > > | > | this is not the same as applying 'retrospective rules' - all it | > | is | > || > > | > | doing is giving transitional protection to existing benefits. | > || > > | > | | > || > > | > | Neil. | > || > > | > | | > || > > | > | Stickems. wrote: | > || > > | > | > If a pension matured pre A Day and is in deferment which | > rules | > | will | > || > > | > apply if | > || > > | > | > the pension is backdated to a date prior to A Day. Is it the | > | so | > || > > called | > || > > | > | > retrospective A Day rules or is it the rules that pertained | > | prior to | > || > > A | > || > > | > Day? | > || > > | > | | > || > > | | > || | > | | > | |
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
Are they effectively talking about the 'scheme retirement age' under the plan ?
You may need to ammend this on the scheme rules if you have now passed that date.
Stickems. wrote:

Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload

Why would that matter at all? You can retire either before or after the 'scheme retirement age'...

Why? How would that help?...
AIUI, the OP is talking about making his effective date of retirement in 2003 - then the missing pension payments would be paid now in one big lump. Surely that would be based on the law applicable in 2003? He wouldn't be "retiring now", he'll be saying "I retired back in 2003, now pay me the pension I've missed in the meantime!"
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
The changes made earlier this year are retrospective, aren't they?
| > You may need to ammend this on the scheme | > rules if you have now passed that date. | | Why? How would that help?... | | AIUI, the OP is talking about making his effective date | of retirement in 2003 - then the missing pension payments | would be paid now in one big lump. Surely that would | be based on the law applicable in 2003? He wouldn't | be "retiring now", he'll be saying "I retired back in 2003, | now pay me the pension I've missed in the meantime!" | | |
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload

"Stickems." wrote

How do you mean? Do you think that someone who had overfunded under the old rules and therefore had to pay extra tax when they retired, say in 2003, will get that tax refunded now if there was no overfunding on the new rules?
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
The old laws are no more. The new rules should be applied.
wrote | > | > You may need to ammend this on the scheme | > | > rules if you have now passed that date. | > | | > "Tim" wrote | > | Why? How would that help?... | > | | > | AIUI, the OP is talking about making his effective date | > | of retirement in 2003 - then the missing pension payments | > | would be paid now in one big lump. Surely that would | > | be based on the law applicable in 2003? He wouldn't | > | be "retiring now", he'll be saying "I retired back in 2003, | > | now pay me the pension I've missed in the meantime!" | > | "Stickems." wrote | > The changes made earlier this year are retrospective, aren't they? | | How do you mean? | Do you think that someone who had overfunded under | the old rules and therefore had to pay extra tax when | they retired, say in 2003, will get that tax refunded | now if there was no overfunding on the new rules? | | |
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload

"Stickems." wrote

Of course, from April this year onwards. But it was the *old* rules back in 2003, wasn't it?
Do you think the new rules should be applied retrospectively to someone who retired back in 2003?
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
Yes, if they haven't taken any benefits by deferring their pension. The tax office think as I do.
| > | > | > You may need to ammend this on the scheme | > | > | > rules if you have now passed that date. | > | > | | > | > "Tim" wrote | > | > | Why? How would that help?... | > | > | | > | > | AIUI, the OP is talking about making his effective date | > | > | of retirement in 2003 - then the missing pension payments | > | > | would be paid now in one big lump. Surely that would | > | > | be based on the law applicable in 2003? He wouldn't | > | > | be "retiring now", he'll be saying "I retired back in 2003, | > | > | now pay me the pension I've missed in the meantime!" | > | > | > | "Stickems." wrote | > | > The changes made earlier this year are retrospective, aren't they? | > | | > "Tim" wrote | > | How do you mean? | > | Do you think that someone who had overfunded under | > | the old rules and therefore had to pay extra tax when | > | they retired, say in 2003, will get that tax refunded | > | now if there was no overfunding on the new rules? | > | "Stickems." wrote | > The old laws are no more. The new rules should be applied. | | Of course, from April this year onwards. But | it was the *old* rules back in 2003, wasn't it? | | Do you think the new rules should be applied | retrospectively to someone who retired back in 2003? | | |
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload

"Stickems." wrote

If they are still "deferred" then they have not "retired"...
What are you trying to achieve? - To have "retired" in 2003, and so receive all missing payments from between 2003 & now, or to "retire" now after deferment?
You say you want to "backdate ... to maturity in 2003", but then you say that you are "deferring" the pension. Well - which is it?
"Stickems." wrote

And how do you (/"they") think?
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
They say the old rules are no more and cannot be applied retrospectively and that the new rules must be applied after 5th April 2006 and that the new rules are retrospective.
wrote | > | > | > | > You may need to ammend this on the scheme | > | > | > | > rules if you have now passed that date. | > | > | > | | > | > | > "Tim" wrote | > | > | > | Why? How would that help?... | > | > | > | | > | > | > | AIUI, the OP is talking about making his effective date | > | > | > | of retirement in 2003 - then the missing pension payments | > | > | > | would be paid now in one big lump. Surely that would | > | > | > | be based on the law applicable in 2003? He wouldn't | > | > | > | be "retiring now", he'll be saying "I retired back in 2003, | > | > | > | now pay me the pension I've missed in the meantime!" | > | > | > | > | > | "Stickems." wrote | > | > | > The changes made earlier this year are retrospective, aren't they? | > | > | | > | > "Tim" wrote | > | > | How do you mean? | > | > | Do you think that someone who had overfunded under | > | > | the old rules and therefore had to pay extra tax when | > | > | they retired, say in 2003, will get that tax refunded | > | > | now if there was no overfunding on the new rules? | > | > | > | "Stickems." wrote | > | > The old laws are no more. The new rules should be applied. | > | | > "Tim" wrote | > | Of course, from April this year onwards. But | > | it was the *old* rules back in 2003, wasn't it? | > | | > | Do you think the new rules should be applied | > | retrospectively to someone who retired back in 2003? | > | "Stickems." wrote | > Yes, if they haven't taken any | > benefits by deferring their pension. | | If they are still "deferred" then they have not "retired"... | | What are you trying to achieve? - To have "retired" | in 2003, and so receive all missing payments from | between 2003 & now, or to "retire" now after deferment? | | You say you want to "backdate ... to maturity | in 2003", but then you say that you are | "deferring" the pension. Well - which is it? | | "Stickems." wrote | > The tax office think as I do. | | And how do you (/"they") think? | | |
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload

BeanSmart.com is a site by and for consumers of financial services and advice. We are not affiliated with any of the banks, financial services or software manufacturers discussed here. All logos and trade names are the property of their respective owners.

Tax and financial advice you come across on this site is freely given by your peers and professionals on their own time and out of the kindness of their hearts. We can guarantee neither accuracy of such advice nor its applicability for your situation. Simply put, you are fully responsible for the results of using information from this site in real life situations.