Guidance: Information pension scheme administrators must give to members

Flexible access statement

When a member flexibly accesses their money purchase pension savings (a trigger event) you must give them a flexible access statement.

You don’t need to give a flexible access statement to the member if:

• you’ve already given them a flexible access statement in relation to an earlier trigger event under the scheme
• the member or the scheme administrator of another pension scheme has told you that they have previously flexibly accessed their pension rights

Information to give in the flexible access statement

You must include that:

• the member has flexibly accessed their pension savings and the date of the relevant event
• from 6 April 2017, if the member’s total pension inputs into money purchase arrangements and certain hybrid arrangements is more than the money purchase annual allowance for a tax year:
  • they will be liable to an annual allowance charge on the excess amount over the money purchase annual allowance for that tax year

  • their annual allowance for pension inputs under other types of arrangements will be covered by the alternative annual allowance

  • the member has a duty to pass on information to other pension schemes – describe the circumstances in which they must pass on that information, what information has to be passed on and the relevant time limits

When you must provide the flexible access statement

You must give the flexible access statement to the member within 31 days of the date of the relevant event. If you don’t give the information on time or it’s incorrect you may be charged a penalty.

Pension savings statement

This is a statement of the amount of pension saving in the pension scheme for a tax year. If a member has more than one pension pot under the same scheme the statement must cover all of their pension pots.

You must give the member a pension savings statement if:

• their savings in a pension input period are more than the annual allowance
• you have reason to believe they have flexibly accessed their pension savings and their money purchase input amounts under the scheme exceeded the money purchase annual allowance

Even if you don’t have to give a pension saving statement, a member can still ask you to give them this information.

Member has flexibly accessed their pension savings

If you have reason to believe the member has flexibly accessed their pension savings, and their money purchase input amounts under the scheme exceeded the money purchase annual allowance, you must give them a money purchase pension savings statement. You can find out what information to include in the money purchase pension savings statement in the Pensions Tax Manual.

Member has not flexibly accessed their pension savings

If the member’s savings in a pension input period are more than the annual allowance, but they have not flexibly accessed their pension savings you must give them a standard pension savings statement.

The standard pension savings statement must contain the:

• total amount of the member’s pension inputs made to the scheme in the pension input period ending in the tax year
• amount of the annual allowance for that tax year
• total amount of the member’s pension inputs made to the scheme for each of the pension input periods ending in the previous 3 tax years
• amount of the annual allowance for the previous 3 tax years

When you must provide a standard or money purchase pension savings statement

You must automatically give a standard pension savings statement to the member if either:

• the amount of their pension inputs in the scheme is more than the annual allowance
• you have no reason to believe your member has flexibly accessed their pension savings
• you believe your member has flexibly accessed their pension savings and:
  • their money purchase pension input amounts to the scheme don’t exceed the money purchase annual allowance
  • the amount of their pension inputs in the scheme is more than the annual allowance

You must automatically give your member a money purchase pension savings statement if:

• you believe they have flexibly accessed their money purchase pension rights
• their money purchase pension savings for the tax year are more than the available money purchase annual allowance

If you don’t have to automatically send a statement, you must give the member the information they’ve requested within 3 months. If they ask for the information before 6 July following the end of the tax year you have until 6 October to give them this information.

Sometimes you won’t be able to give the pension statement within these deadlines because you’re waiting for information from another person – such as from a scheme employer. In this case you have 3 months to send the statement after you get the information.

If you don’t provide the information on time or it’s incorrect you may be charged a penalty.

You can find technical guidance on pension statements in the Pensions Tax Manual.

Lifetime allowance statement

When a benefit crystallisation event (BCE) occurs you have to check whether a member’s pension savings have exceeded the lifetime allowance rate.

You’ll also need to check whether a member has any available tax-free lump sum, as this is limited to 25% of their pension pot, up to a maximum of 25% of their available lifetime allowance. Most individuals’ lifetime allowance is the standard lifetime allowance. If they hold certain lifetime allowance protections, the amount of the tax-free lump sum they can take may be higher.

When you’ve carried out this check you must tell the member what percentage of the lifetime allowance they’ve used up by the BCEs occurring in the scheme.

When you must provide the lifetime allowance statement

If their pension started to be paid after 6 April 2006 and you’re paying a pension to the member you must provide this information at least once every tax year.

If you’re not paying a pension – for example because the scheme only paid a lump sum – you must provide this information within 3 months of the BCE.

You can stop providing an annual lifetime allowance statement in the following circumstances:

• the member is 75 or older for the whole of the tax year – so the last statement you issue is for the tax year when they reach age 75
• the member’s pension pot has been transferred to another pension scheme – the receiving scheme will issue annual lifetime allowance statements
• you’ve given pension funds to an insurance company to pay the member’s pension – you tell the insurer the percentage of allowance used for those funds and they issue the statement to the member
• from 6 April 2015, where all funds held in respect of a member under the scheme have been extinguished and no further pension or lump sum payments can be made

You can find detailed technical guidance on lifetime allowance statements in the Pensions Tax Manual.

When a lifetime allowance charge is due

The member and scheme administrator are jointly liable to pay the lifetime allowance charge unless the event causing the charge is the member’s death. In most cases the scheme administrator must report the charge and pay the tax due using the Accounting for Tax (AFT) Return. You do not need to report zero charges on the AFT return.

You have 3 months to tell the member:

• how much of their pension savings are subject to the lifetime allowance charge
• how you’ve calculated the tax and the amount due
• if you’ve paid or intend to pay the tax

The member needs this information to complete their Self Assessment tax return telling HM Revenue and Customs (HMRC) how much tax was payable and how much their scheme paid. They do not have to report zero charges.

You’re paying lump sum death benefits

If your scheme is making a payment because the member has died the scheme doesn’t pay the lifetime allowance charge. But you may need to deduct tax.

If your scheme has paid a lump sum death benefit that uses up the member’s lifetime allowance you must tell the member’s personal representative the:

• percentage of the lifetime allowance used up by the lump sum payment
• date of payment

You have 3 months to give this information to them.

If the member’s personal representative asks for information on any other benefits the scheme has paid that used up the member’s lifetime allowance you must give them this information within 2 months of their request.

You can find detailed technical guidance on information requirements where the scheme member has died in the Pensions Tax Manual.

Transfers to an overseas pension scheme

You need to:

• check if tax needs to be paid when a scheme member requests that you transfer their pension savings to an overseas pension scheme
• tell your scheme member within 30 days of them requesting the transfer, to give you information about the transfer – you can use form APSS263 to request this information from your member
• decide whether or not the transfer will be liable to the overseas transfer charge

Your scheme member has 60 days from their transfer request to give you the information. If they don’t, you must deduct the overseas transfer charge if you make the transfer.

If tax needs to be paid, you must tell the scheme member within 3 months:

• the date of the transfer
• that an overseas transfer charge applies to the transfer
• the amount of the transfer that’s subject to the overseas transfer charge
• the amount of tax that needs to be paid
• whether you’ve paid the tax charge (or intend to do so)
• the date the tax was paid
• whether you’ve reported the tax to HMRC

If tax doesn’t need to be paid, you must tell the scheme member why not and date the transfer took place within 3 months.

Overseas transfer charge refunds

If you previously paid an overseas transfer charge that’s later refunded by HMRC, you must tell the scheme member within 3 months of the repayment:

• the date of the repayment
• how much was refunded to your registered pension scheme
• the reason why the tax was repaid