HMRC have issued Pension Schemes Newsletter 49. The key message in the newsletter is the updating of the Registered Pension Schemes Manual (RPSM) to reflect changes to the pensions tax regime introduced by the Finance Act 2011 and accompanying regulations.  Some 700 pages of the manual have been updated on a range of matters, including:

  • The new annual allowance rules.  Of particular interest here are the issues raised in relation to the deferred member exemption. The RPSM points out  that the deferred member exemption may not apply if a deferred member's benefits are linked to his final salary or where an employed member’s accrued pension rights increase at a rate that is higher than would have been the case had the member left the employer’s service - in the case of the latter, the RPSM states that the higher prospective entitlement arises solely in connection with employment and is treated as an accrual; the individual, therefore, is not considered to be a deferred member and the deferred member exemption will not apply.
  • "Fixed protection" that will allow members to opt to have the current lifetime allowance (LTA) of £1.8m continue to apply to them after 6 April 2012 (under the Act, the LTA will be reduced to £1.5m from that date).

The newsletter also details the duties of the scheme administrator in relation to the new drawdown regime for drawing a pension from a money purchase or cash balance arrangement.  With respect to flexible drawdown element of the new drawdown regime, the newsletter gives helpful information as to the comforts that the scheme administrator should obtain that the member satisfies the minimum income requirement required under flexible drawdown.


To help schemes and employers understand the implications of the Act, we have produced a briefing "Finance Act 2011 – what does it mean for your pension scheme" which looks at the key provisions of the Act and problem areas. To view the briefing click here.