Protected Pension Age & Transfers

jak92

Hello

I’ve been reading PTM062200 - Member benefits: pensions: protected pension age: contents, and its sub-sections, but I have not found an answer to my question. Wonder whether anyone knows before I reach out to IFA.

One of my older workplace pension policies (let’s call it Policy A) has a protected pension age of 55. The new legislation increases National Minimum Pension Age (NMPA) from 55 to 57, from April 2028.

Given I’m approx. 30 years away from retirement, I am naturally keen to keep the benefit (god knows what the pension age will be by then!).

At the same time, the management charges on the policy with protected pension age are quite high, so I’m keen to not invest any more into it to save on the management fees.

Instead, I invest in a separate policy (let’s call it policy B), with far lower fees and wider investment fund choice, where the majority of my retirement fund is held and invested.

The question I have is whether as of today (we don’t know which way the legislation will go over the 30 years period) I can transfer pension savings from policy B to policy A, and have the benefit applied to the sum.

The closest paragraph I could find was one regarding transfers in the other direction (policy A to policy B) - Paragraph 23ZC Schedule 26 Finance Act 2004 - Individual Transfers. You can transfer a policy with a protected pension age of 55 or 56, and retain the protected pension age in the receiving scheme, however, the protected pension age doesn’t apply to other sums or assets already held in the receiving scheme (just the sum transferred and any profits from it).

Of course, that also depends on whether the receiving provider supports such individual transfer.

Hence I started to wonder whether a transfer in the opposite direction (into a policy with protected pension age) would work around that, let’s say in 25 years' time, but I can’t find any paragraphs regarding that…

I have reached out to the policy A provider, who confirmed the benefit applies to the policy, not to the sum the policy held before the legislation was passed.

TLDR: Can I transfer a pension fund from a policy without a protected pension age benefit to a policy with it and have the benefit apply to the entire sum held within the policy?

Keen to hear anyone else's experience/ knowledge share.

Thanks

Marcon

jak92 said:

Hello

I’ve been reading PTM062200 - Member benefits: pensions: protected pension age: contents, and its sub-sections, but I have not found an answer to my question. Wonder whether anyone knows before I reach out to IFA.

One of my older workplace pension policies (let’s call it Policy A) has a protected pension age of 55. The new legislation increases National Minimum Pension Age (NMPA) from 55 to 57, from April 2028.

Given I’m approx. 30 years away from retirement, I am naturally keen to keep the benefit (god knows what the pension age will be by then!).

At the same time, the management charges on the policy with protected pension age are quite high, so I’m keen to not invest any more into it to save on the management fees.

Instead, I invest in a separate policy (let’s call it policy B), with far lower fees and wider investment fund choice, where the majority of my retirement fund is held and invested.

The question I have is whether as of today (we don’t know which way the legislation will go over the 30 years period) I can transfer pension savings from policy B to policy A, and have the benefit applied to the sum.

The closest paragraph I could find was one regarding transfers in the other direction (policy A to policy B) - Paragraph 23ZC Schedule 26 Finance Act 2004 - Individual Transfers. You can transfer a policy with a protected pension age of 55 or 56, and retain the protected pension age in the receiving scheme, however, the protected pension age doesn’t apply to other sums or assets already held in the receiving scheme (just the sum transferred and any profits from it).

Of course, that also depends on whether the receiving provider supports such individual transfer.

Hence I started to wonder whether a transfer in the opposite direction (into a policy with protected pension age) would work around that, let’s say in 25 years' time, but I can’t find any paragraphs regarding that…

I have reached out to the policy A provider, who confirmed the benefit applies to the policy, not to the sum the policy held before the legislation was passed.

TLDR: Can I transfer a pension fund from a policy without a protected pension age benefit to a policy with it and have the benefit apply to the entire sum held within the policy?

Keen to hear anyone else's experience/ knowledge share.

Thanks

Have a look at https://techzone.abrdn.com/public/pensions/Tech-guide-pension-age#anchor_5 and scroll down to 

Losing a protected low pension age

Brie

In my experience work pensions have only accepted transfers in by current employees and sometimes only within a certain window when they are first employed.  As a deferred member I doubt you can transfer anything in to your Policy A.  Best to check that schemes T&Cs to see if that's possible.

And fyi - I had a protected benefit of being able to take my pension at age 50 from an ex employer's scheme.  I was notified when the minimum standard early retirement age was increasing to 55 that if I wanted to take my pension early (at a discount) I would need to apply sooner rather than later else I'd be stuck with the 55 age.  I didn't do it but obviously the scheme was able to change this legally.

Marcon

Brie said:

In my experience work pensions have only accepted transfers in by current employees and sometimes only within a certain window when they are first employed.  As a deferred member I doubt you can transfer anything in to your Policy A.  Best to check that schemes T&Cs to see if that's possible.

That's certainly the case with trust-based schemes, especially defined benefit, but if it's some sort of personal pension there's unlikely to be an issue. The repeated references to the term 'policy' suggests it may well be just that, but as you say, OP needs to check the T&Cs.