Six month transfer window brings opportunity for enhanced lump sum retention

20/10/2014

A combination of careful due diligence and a relaxation in transfer rules next year could present members of older style pension schemes with new retirement saving opportunities whilst preserving their higher tax-free lump sum entitlements, according to Rowanmoor Group plc, the UK’s largest independent SSAS provider and a bespoke SIPP and Family Pension Trust (Family SIPP) operator.

A combination of careful due diligence and a relaxation in transfer rules next year could present members of older style pension schemes with new retirement saving opportunities whilst preserving  their higher tax-free lump sum entitlements, according to Rowanmoor Group plc, the UK’s largest independent SSAS provider and a bespoke SIPP and Family Pension Trust (Family SIPP) operator.

Members of older schemes, such as executive pension plans (EPPs), have historically enjoyed the ability to benefit from enhanced tax-free lump sum payments over and above the current normal limit of 25% of the fund’s value. However, since 2006 those with a higher lump sum entitlement have only been able to retain this if benefits are taken from the scheme in which they were accrued, or transferred to a new scheme as part of a block transfer.

Members wanting to retain their higher tax-free entitlement will have the option to do so providing they transfer into a suitable new arrangement by 5 April 2015 and crystallise their benefits before 6 October 2015.  Member-directed schemes such as SIPPs and SSASs can, with appropriate due diligence and careful consideration, offer an alternative for members who may be looking for more options and increased control when making investments and taking their benefits.

Ian Hammond, Managing Director, Rowanmoor Group plc, said:

“At Rowanmoor Group plc, we are keen to ensure scheme members are well informed about industry changes. The Government has provided members of older schemes with a rare window of opportunity to transfer to a new pension arrangement and retain any higher tax-free lump sum they might have, accrued within their pension.

“SIPPs, SSASs and Family SIPPs are member-directed schemes that can give members more autonomy on how they invest or take their benefits.  We think that this transfer window will be of particular interest to individuals looking to invest in UK commercial property, and small business owners looking to access funds to invest in their business, which can be done through a SSAS’s unique loan feature.  However, as with any investment decision, it is important that people seek advice as part of their due diligence before committing to any new scheme.  It is our firm belief that members should select a scheme that enables them to get the most out of their retirement.”