Focus 94 – Individual protection and block transfer update

Relaxation of block transfer rules

Since 2006, there has been a significant number of people with protected tax free cash who have been trapped in under performing or excessively restrictive pension schemes. The majority of these schemes would have been executive pension plans or section 32 policies. They harboured tax free cash entitlements in excess of 25% since A-Day.

The easement allows a block transfer to take place with a single member
The schemes that hold this level of tax free cash are often outdated and do not offer the investment flexibility many would now like. In addition, they generally do not offer the ability to take drawdown. This tends to be the biggest issue because the member can be forced to choose between all their tax free cash and an annuity or restricted tax free cash and freedom to invest in what they want and take their benefits as they see fit.

Due to the proposed changes to pension benefits announced in the 2014 Budget, provisions have been added to the Finance Bill 2014 to allow transfer without the loss of the protected tax free cash. This is actually an easement on the block transfer rules so it also applies to those with protected pension ages.

The easement allows a block transfer to take place with a single member provided it happens between 19th March 2014 and 6th April 2015 and the member becomes entitled to all the pension associated with that arrangement before 6th October 2015.

This means that a single member scheme can transfer to any type of scheme provided they can enter drawdown before 6th October 2015, which would mean they would need to be age 55 by this date if they want to take advantage of protected tax free cash from the ceding scheme.

Individual Protection

With the announcement that individual protection forms will be available from 18th August 2014, it is time to start thinking about requesting valuations for clients needing to apply.

Requests for valuations at 5th April 2014 should be made to your usual administrator as soon as possible to avoid any delays. They will be charged at the standard fee of ยฃ100 per scheme so for SSAS there will only be one charge regardless of the number of members in the scheme.

Where there is property held by the scheme, a RICS qualified chartered surveyor will need to be instructed and the property fee paid for by the scheme. Please instruct the surveyor to send the resulting valuation directly to your administrator.

If you need any help prior to the request. please speak with your usual Talbot and Muir consultant or administrator, who will be happy to help.

Welcome to your new southern based consultant

We would like to welcome Justin Randall as our Business Development Consultant for the South region. He joins from Prosperity Financial Advisors & Stockbrokers, where he was Head of Operations.

Justin has nearly 20 years’ experience in financial services, from retail banking through long-term care, and spent the last ten years in the advice sector. This knowledge and experience from the adviserโ€™s perspective will be invaluable to Talbot and Muir as it continues to grow and develop in this highly competitive market.

If you would like to contact Justin, he can be reached by phone on 07539 121 220 or by e-mail at justin.randall@talbotmuir.co.uk