Protected TFCS

jc2001

Hi,

Could someone please tell me what protected TFCS is?

My old company pension scheme is being wound up and I have the option to transfer it into my current company scheme and the statement says:

The protected TFCS as at 5 April 2006 is £6k. Transitional protection of this cash sum will be lost if you voluntarily transfer your benefits out of the plan.

Thanks in advance.

Loughton_Monkey

Tax Free Cash Sum

dunstonh

Could someone please tell me what protected TFCS is?

It is where your pension has a greater tax free cash entitlement of 25% and transitional relief has been obtained (often automatically on some schemes)

If your scheme has a greater than 25% TFC entitlement then this will be lost on transfer. e.g. if you TFC equates to 78% of current fund value, on transfer you will lose that and you will get 25% in future.

RichandJ

Alternatively, if your old pension is defined benefit, the £6k was the tax free cash as calculated at 6/4/2006 (or before), usually on a 3N/80ths basis, where N was your pensionable, or sometimes company, service. If you retain benefits in that scheme and the cash calculation at retirement is less than the £6k increased by the difference in the Lifetime Allowance, if any, between 2006 and retirement then the higher value will be used.

If you transfer benefits transitional protection is lost and cash available from the transfer will be whatever is calculated at subsequent retirement whether this be 25% of a fund value or 25% of the 'value' of additional pension.

This all arose from the 'simplification' :rotfl: of pension provision.

jc2001

Thanks for your replies - much appreciated