Section 32
Calvert76
Member
Hi All,
I am a bit rusty on protected tax-free cash, can anyone clarify on whether you can transfer a wound up single member scheme to a s32 and keep the protected tax?
I have a client with an old occupational scheme which was wound up a number of years ago and he kept the protected tfc, if he now transfers the benefits out to a S32 will he lose the tfc entitlement (unless it is a buddy transfer which won’t be possible)?
Thanks
I am a bit rusty on protected tax-free cash, can anyone clarify on whether you can transfer a wound up single member scheme to a s32 and keep the protected tax?
I have a client with an old occupational scheme which was wound up a number of years ago and he kept the protected tfc, if he now transfers the benefits out to a S32 will he lose the tfc entitlement (unless it is a buddy transfer which won’t be possible)?
Thanks
Comments
In standard cases, this would be lost if transferred to another pension scheme.
I think if the scheme has been wound up then this would be retained. It's usually lost on plans where the scheme has not been wound up. I'm 85% on that but would welcome anyone else's views....
S32 transfer to another S32 - protected PCLS can be kept.
I have clarified this with HMRC by phone in the past (as well as with a highly regarded tech person from a large UK life office).
Transact accepts the enhanced PCLS as receiving scheme provided they have the enhanced level confirmed by the ceding scheme. This is key - the receiving scheme needs to accept the enhanced PCLS calc.
This is allowed as the S32 is wound up on transfer (as it is a standalone single member occupational scheme) so buddy transfers etc are not required.
That's handy information Richard, as suspected.
Les Cameron from Prudential / M&G saw this and emailed me some thoughts....
They need to investigate - the scheme is wound up so the money is no longer in the scheme and what they have is not a one member OPS.
What happened on wind up:
a) a deferred annuity bought
b) a s32 bought.
c) the policy was placed in the members name.
In these scenarios they should have kept PTFC.
They are now in a one member scheme so they cannot by definition do a block transfer so a transfer will lose them PTFC.
BUT!
If they wind up what they currently have and transfer on to a new s32/deferred annuity they can still keep protections as the winding up means it meets the block transfer conditions.
https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm063150
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