Operator: Good day and welcome to the Scottish Widows masterclass conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr Paul Rutkowski. Please go ahead, sir.
Paul Rutkowski: Thank you very much. Good morning everybody and welcome to the Scottish Widows CII accredited tech talk masterclass on pensions transfers. Today I'm joined by Bernadette Lewis and Tom Coughlan from the Scottish Widows financial planning team, who'll shortly be taking us through the presentation. At the conclusion of the presentation, you will hear where you can find and access further information covered in today's slides.
As you'll be aware, the objective of these presentations is to provide you with valuable insights into topical areas of pensions planning and so I'm sure you'll all agree that with the persistent focus in the news on the many different aspects of pensions transfers, that this is a terrific topic to examine today.
Pensions transfers is a broad subject, with many different advice and risk facets, including issues affecting transfers between registered pension schemes, specific rules relating to transfers of draw down arrangements and block transfer rules for scheme specific tax free cash purposes, so a comprehensive understanding of the rules is important and therefore all will be covered in today's presentation.
The FCA, as recently as October this year, published the feedback and final rules from its consultation on improving the quality of pension transfer advice. The changes include a requirement for all pension transfer specialists to hold a specific qualification for providing advice on investments by October 2020, enabling advisers to identify whether a proposed pension scheme and investment solution is consistent with the client's needs and objectives. The FCA also expects advisors to consider their client's attitude to and understanding of the risks of giving up safeguarded benefits for flexible benefits. These new rules should improve the advice that people get when considering transferring their pension, including as a result of the pensions freedoms.
To further highlight the importance of pension transfers, it is worth noting that the market is continuing to see large business flows attributed to transfers. For example, in the defined benefit to defined contribution space, the values of transfers rose from £7.9 billion in 2016 to £20.8 billion in 2017 and the number of transfers in 2017 was up to 92,000. Other types of transfers also contribute to large flows in the market. Today's presentation will last for about 40 minutes, following which there will be time to answer any of the questions that you have raised. Full details of how you can ask questions will again be given out at the end but feel free to ask online as you go along. The presentation will be recorded and available for subsequent review via the Scottish Widows extranet and CPD certificates will also be issued for those who are attending live.
I'd like to now hand the call over to Tom to continue.
Tom Coughlan: Thank you Paul. Good morning everyone. A couple of things just to clarify just before we get into the main technical content and first of all, that is what a pension transfer is. So, under HMRC rules, that is the movement of a member's benefit from one registered pension scheme to another and that is separate from the FCA definition of a transfer and during the session we focus principally on the HMRC tax rules, as per the pensions tax manual, rather than the advice aspects under the FCA rules. But, inevitably, there's some crossover between those two.
Okay, so we'll start by looking at the basic HMRC requirements for transfers between schemes. We'll then move on to draw down to draw down transfers. We'll also look at block transfers that enable certain pre A day entitlements to be protected and we'll look at the lifetime allowance consequences that can arise when money is moved from one scheme to another. And then we've got quite a long section at the end regarding transferring from a UK scheme to an overseas scheme. And as Paul mentioned, we'll then deal with any questions that you've submitted throughout the session.
So, starting with your basic HMRC requirements, so a transfer out of a UK registered scheme has to be a recognised transfer and that means it either has to go to another UK registered pension scheme or if it is moving abroad, it has to go to a QROPS and there is an exception to that, which is that if the money is moving to the Pension Protection Fund, or the financial assistance scheme, then that also qualifies as a recognised transfer as well.
Internal transfers within schemes don't need to comply with this recognised transfer requirement because, as far as HMRC are concerned, you're just reallocating money within the scheme. But that doesn't mean it won't necessarily qualify as a transfer under FCA policy, which is a separate requirement to satisfy. But as far as the HMRC rules are concerned, moving from one personal pension under a scheme to another personal pension under the same scheme doesn't need to qualify as a recognised transfer. But, as I said, separately you may have to satisfy the FCA requirements relating to moving money.
A transfer out of a registered scheme that doesn't qualify as a recognised transfer, as per that first bullet, is an unauthorised payment and that attracts various penal charges. That is definitely something to avoid.
FCA rules do require a cancellation period, even for a transfer and if those calling off rights are exercised then those benefits have to be returned to the original scheme. And very topical at the moment, any transfer of safeguarded benefits, defined benefit, GMP, guaranteed annuity rates, if they are over the £30,000 threshold then they may require advice under FCA rules and some schemes will insist that advice is sought, even if the threshold isn't exceeded.
When moving money from out from a defined benefit scheme, there is the pension input amount calculation and that can be affected by the transfer. We've got some more details on that on the following slide but that's just something to be aware of when moving money out of a defined benefit scheme. And also a transfer out can cause a member to lose their lifetime allowance protection if it doesn't qualify as a permitted transfer but those two bullets are covered later on: the first one on the next slide and the second transfer point, regarding LTA protection, on a later slide.
So we'll start with the pension input amount calculation. This is something that IFAs need to be aware of when they're advising on transfers out of DB schemes and also from DB schemes to other DB schemes as well. So the pension input amount calculation just looks at how much has been accrued within the scheme over the year and tests that against the annual allowance. But the transfer out changes that calculation somewhat, so to be aware exactly how much annual allowance the member has used. These are some rules to be aware of. So, just a reminder of how the annual allowance calculation works under a DB scheme, there are various ways this can be approached but I think the simple way is to start with the closing value. So the closing value will be the amount in the pension and the lump sum on 5th April, at the end of the pension input period. That accrued pension is multiplied by 16 and you add to that any separately quoted lump sum. If the lump sum is generated by computation of the pension then it's not taken into account. Then you contrast that with the opening value of the pension at the start of the year, so that would be the previous 6th April, as pension input periods are always aligned with the tax year now. So 16 times the pension at the start of the year, plus, again, any separately quoted lump sum. The difference between those is the amount that has been accrued for annual allowance purposes over the year and the opening value is increased by CPI inflation over that time as well, just to ensure that the inflationary increase isn't included in the annual allowance calculation.
However, there is a problem where you've had a transfer out of the DB scheme during the year and that will be that 16 times the pension, for the closing value at the end of the year, would give you zero, as all of the money has been moved from the scheme. So therefore, there needs to be an adjustment for the closing value of the amount transferred out, potentially. And similarly, if the receiving scheme is also defined benefit then there needs to be an equivalent deduction made from the closing value to ensure the pension input amount isn't overstated and there are similar adjustments for pension credits as well.
An example is probably the best way to explain this. So, starting with the opening value for the DB scheme, if, at the start of the year, a £20,000 annual pension has been accumulated then, for annual allowance purposes, you multiply that by 16 and increase by inflation, which in this case, I've assumed, is 2%. That would give you an equivalent value of £326,400 and then you look at the difference between that and the closing value. As I said, rather than using the zero figure, which will be the pension at the end of the year, where there's been a transfer out, then you use the amount accrued just before the transfer instead. So let's say the transfer was half way through the year and by that point the member had accumulated an annual pension of £20,750 and you times that by 16, in this case it gives you £332,000. So, the difference between those two is £5,600 and just by making that adjustment, you've ensured that the pension input amount isn't zero and then you have actually tested it correctly. So that amount would then use the client's annual allowance for the year, which then enables you to work out what their remaining annual allowance is and carry forward and so on.
Okay, moving on to draw down to draw down transfers, so, a draw down can be transferred to another scheme. As it is a pension in payment there's a specific rule that says all those benefits have to be transferred, you can't make a partial transfer. The transfer has to be onto a new draw down arrangement, so the graphic on the left hand side is not possible. You cannot merge two draw downs together, nor can you transfer one draw down into another existing draw down arrangements, so all draw down arrangements have to be transferred separately to a new draw down arrangement. And this legislation dates back to 2006. However, when flexi access draw down was introduced in 2015, that legislation was amended so that flexi access draw down is also subject to this rule. So even though there's no review period on maximum income, we still have this rule that all draw downs have to be transferred on to a new draw down arrangement.
One reason for this is to keep pre A day draw down separate from post A day draw down, so you have to segregate those for the second lifetime allowance test. Pre A day draw down is not subject to the second lifetime allowance test whereas post A day draw down is and by always transferring draw down onto a new, separate arrangement, that ensures that those separate components never get mixed together. And another consequence of that is that no contributions are allowed to the pre A day draw down arrangements as well.
From 2015 no new cap draw down arrangements can be established. However, the exception to that, in accordance with the graphic at the top, is that a new capped draw down arrangement can be established to receive a transfer from another scheme. So you can have an existing capped draw down arrangement that you can transfer onto another scheme and the receiving scheme can set up a new draw down arrangement just to accept that transfer of the existing arrangement. But, as always, there has to be one arrangement to receive each transferred arrangement and there's no possibility of merging those together.
Where capped draw down contracts are transferred then all the aspects relating to the maximum income for that contract will be transferred as well. For the pension year, the dates relating to that are transferred for the reference period and the basis amount which forms the maximum income are transferred as well, so that the receiving scheme is treated as though it was the original scheme. And on the way a member can also decide to convert their capped draw down to a flexi access draw down. But because no new capped draw down arrangements can be established, other than to accept a transfer, you can't do that the other way around, so you can't transfer flexi access draw down and convert it to capped.
Okay, it's just a brief overview of draw down to draw down transfers, so now moving on to block transfers. So this is a way of protecting pre A day entitlements, so the main two are tax free cash amounts greater than 25% held at A day and also low pension age, if the pension age is below 55 or specific lower pension ages relating to certain occupations. We're not going to get into the details of those separate rules but we'll just focus on the block transfer rules.
So, there are two main types of block transfer and it will be one or the other. So, there are buddy transfers, there are winding up transfers. Buddy transfers are where all of a member's benefits under the scheme are transferred to a new scheme and that is along with all of another member's benefits as well, so at least two members' benefits, all their benefits under the scheme being transferred to the same receiving scheme. But the scheme has to have a buddy transfer process in place because that transfer all has to relate to a single agreement, so the transaction to transfer all of those members' benefits, or both of those members' benefits has to be under a single agreement. So the scheme transferring out has to be aware that they are transferring out in accordance with the buddy transfer rules.
There may be admin or legal reasons as to why a particular asset can't be transferred at the same time as all the others but that's okay; that doesn't prevent it from being a buddy transfer, as long as the requirement above, that it's one transaction under a single agreement – as long as that is satisfied. An asset following at a later date doesn't necessarily mean it can't be a buddy transfer.
Another rule relating to buddy transfers is that the protected member mustn’t have been a member of the receiving scheme for more than 12 months at the time. If they are then it can't be a buddy transfer. So that's just something to watch out for, where multiple types of pension are held on the one scheme. You could be a member of, say, a GPP under a scheme and then try and transfer into a separate personal pension. Because both of those are under the same scheme, if you're – you've been a member of one for more than 12 months then that can mean that you don't necessarily qualify under the buddy transfer rules, so it's just important to be aware what type of scheme you're transferring to, the structure of that scheme, what underlies that and what possible other benefits the member has under that scheme.
A separate type of block transfer is a winding up transfer. So this is where the scheme is winding up at the time and has to actually be winding up, it can't be a proposal for the future. And what exactly qualifies as a wind up under the scheme will be determined by the scheme rules. Some larger schemes have multiple sections relating to different employers and it's fine for just one employer to just wind up their part of that larger scheme, so that can still qualify as a wind up.
The transfer on has to be to a section 32 contract. A section 32 contract is a single member contract, so you can't buddy up, as the receiving scheme is a one member scheme but that doesn't matter. There is legislation stating that, as long as the scheme is winding up, when you transfer onto a section 32, it still qualifies as a block transfer, even though it relates to just one member.
In addition to a section 32, you can also assign a policy to the member as well. So this often happens under executive pension plans, the EPP is wound up and an insurance policy is assigned to the member. So that can also qualify as a winding up transfer as well. And section 32 is as I mentioned but also, with retirement annuity contracts, they are single member schemes, so they can't accept buddy transfers, so any transfer has to be under the winding up transfer rules.
I'll just look at four separate members who need to protect either pre A day tax free cash greater than 25% or a low pension age. So, starting with John, who holds two personal pensions under one scheme. He wants to do a buddy transfer to protect the cash free cash, so he has to find another member of that main scheme to transfer out with and both have to transfer to the same receiving scheme and the scheme has to transfer all policies out under a single agreement, under whatever buddy transfer process they have. And John mustn't have been a member of the receiving scheme for more than 12 months, although it doesn't matter with the other member. The other member doesn't even have to have protection, there just has to be another member that is transferring out at the same time as John to the same scheme.
Paul is a member of an occupational pension scheme which is due to wind up in the future. He would need to wait until the scheme actually commences winding up before he can transfer to a section 32 under the winding up transfer rules or have a policy assigned to him. If he doesn't want to wait then he would have to do an immediate buddy transfer and then the requirements are the same as for John on the left hand side.
George holds a SIPP with an illiquid asset, so the requirements here are the same as for John above, it has to be a buddy transfer and he has transfer out as a transaction under a single agreement. However, the illiquid asset, as long as it's covered by the agreement to transfer, can come across at a later date, when it can actually be realised. And that doesn't prevent George from making a buddy transfer out.
And finally, Richard is a member of a section 32 with a greater than 25% lump sum, so he must already have completed a block transfer at some date and he must transfer onto another section 32 policy and he can do that any number of times. There is not a limit on how many times you can do a transfer onto a section 32 where you have greater than 25% tax free cash.
Okay, that is the block transfer rules. I'm going to hand over to Bernadette now, who's now going to look at the lifetime allowance aspects of transferring.
Bernadette Lewis: Thank you Tom. Hi. Now, generally speaking, transferring pension benefits isn't going to trigger a benefit crystallisation event, although there is an exception, which is when you transfer to a QROPS, an overseas pension, when you trigger BCE 8, which we will look at in a little bit more detail shortly. However, transferring can have lifetime allowance implications because it can cause a member to lose either enhanced protection, the A day lifetime allowance protection, or fixed protection following the more recent lifetime allowance reductions.
So to avoid losing enhanced or fixed protection, the transfer has to be a permitted transfer. Generally speaking, if you're transferring your own benefits, either a transfer into a defined contribution or money purchase scheme will be a permitted transfer and transfer into a QROPS will be a permitted transfer. So one of the things you definitely want to avoid is ever transferring into a new final salary or defined benefit scheme.
And while you can't normally set up a new arrangement if you've got enhanced, or fixed, protection, this is permitted when you are doing a permitted transfer. So a permitted transfer into a new money purchase arrangement won't trigger the loss of enhanced, or fixed, protection. One thing to watch out for is transfers of pension credit benefits, which don't come under the permitted transfers rules and you have to transfer those into an existing arrangement to avoid losing enhanced or fixed protection. I’ts just one of those little oddities around the way protection and transfers work.
And of course we do sometimes get queries about people who have got an overseas pension scheme and want to transfer it to the UK. And if they do that, they may be able to apply to HMRC for a lifetime allowance enhancement factor, and they might want to do that if that transfer involves a significant amount of benefits and would affect their entitlement to the UK lifetime allowance when they actually come to crystallise those benefits.
Now if we look at an example which we’ve taken from pensions tax manual, Amanda transfers £700,000 from a registered overseas pension scheme to the UK in December 2007, so that’s in the 2007/08 tax year. The example refers to her having a relevant relievable amount of £300,000, and a relevant relievable amount is the part of the overseas pension scheme which HMRC deems to have benefited from UK tax relief in one form or another. So that might be that a UK employer has contributed and received corporation tax relief. It’s also possible that this is a transfer which includes money which was originally contributed to a UK scheme, transferred overseas and is now coming back. So HMRC is not going to give you a lifetime allowance enhancement in respect of any benefits which have benefited from UK tax relief, it’s giving you the enhancement in respect of overseas pension benefits that have not benefited from UK tax relief. So we deduct from her £700,000 transfer value the £300,000 relevant relievable amount and that leaves £400,000 which will be considered for the enhancement factor. And to work out the enhancement factor, you divide that allowable amount by the lifetime allowance for the tax year in which the transfer takes place. So in this case by £1.6 million, because that was the lifetime allowance in 2007/08, and she ends up with a lifetime allowance enhancement factor of 0.25. And as I said, she needs to apply to HMRC if she wants to take advantage of that opportunity.
Pension sharing orders are another kind of transfer, but slightly different to other kinds of transfer. Normally you can transfer a pension project to any scheme of your choice, so the ex-spouse who has suffered the pension debit will remain in their scheme, the scheme will carve out the pension credit and the pension credit member then gives that scheme instructions about where they want their pension credit to be transferred to. The exception for this rule is some of the public sector schemes, where you’re not allowed to transfer out your pension credit and you have separate, entirely carved-out rights but within the original scheme.
The pension credit, because it’s a transfer, is not normally treated as a contribution. The exception would be when it comes from a pension debit member who didn’t have a registered pension scheme. So it might be something that would now be categorised as a EFRBS, so one of those slightly borderline pension-type arrangements, which could still be included in some of these divorce settlements.
A pension credit is another situation that can trigger a lifetime allowance enhancement factor. There are some particular rules for this. First of all, the member getting the pension credit has got to receive that credit after 6th April 2006, and in addition the benefit that it’s coming from has got to have been crystallised by the original member, again after A-Day. So we’re talking about disqualifying pension credits here. And if we go to a little example, we’ll assume that somebody gets a pension credit of £150,000 at a point when the lifetime allowance was £1.5 million, in which case they get a lifetime allowance factor of 10% if we talk in percentage terms, 0.1% if we talk in terms of applying this to the lifetime allowance. And because we’ve also experienced recent reductions in the lifetime allowance, there are special rules about how the enhancement factor is applied. So if the enhancement factor arises before 6th April 2012, it applies to the £1.8 million highest lifetime allowance. Between 6th April 2012 and 5th April 2014, it’s applied to the £1.5 million lifetime allowance based on the reduction to £1.5 million in April 2012, and then again between April 2014 and April 2016 it’s applied to a lifetime allowance of £1.25 million, tracking the lifetime allowance reduction in 2014. So our particular client received their lifetime allowance enhancement factor between 6th April 2012 and 5th April 2014. So we apply the lifetime allowance enhancement factor element to a lifetime allowance of £1.5 million, add the result of that to the current standard lifetime allowance of £1.03 million, and that gives this particular individual a £1.18 million enhanced lifetime allowance, and that assumes that they applied to HMRC to get their lifetime allowance enhancement.
So we now turn to overseas transfers, where there are various issues to consider. This is one of the points where we will look at some of the regulatory issues surrounding safeguarded benefits, because if somebody is transferring from the UK to overseas, the rules around safeguarded benefits apply in all cases. So if that transfer includes defined benefits, GMP or Section 9(2A) benefits or guaranteed annuity rate benefits, and those benefits are above £30,000, that triggers the requirement that they must receive UK regulated advice, so they’re going to have to approach a UK adviser for that element. And of course it’s quite possible that their UK adviser will say, “Well, I can only advise you on the transferring out bit. We’re going to have to work with an overseas adviser to look at that country’s pension and tax regime.” So that particular member may well have to pay two different advisers in two different countries to get the full picture of the consequences of making that transfer.
To be a permissible transfer, you’ve got to transfer to an overseas pension scheme which meets the QROPS rules, the Qualifying Recognised Overseas Pension Scheme rules. And this requirement applies as at the date of the transfer, so it doesn’t matter if the QROPS ceases to be a QROPS after the transfer, but it does mean that sometimes when HMRC conducts one of its regulatory reviews and decides that a whole bunch of overseas pension schemes which thought they met the QROPS rules, HMRC decides that they don’t meet those rules after all, if a transfer was partway through at that point, you would have to stop that transfer because the receiving scheme would have ceased to be a QROPS as at the date of the transfer, even if it might have been a QROPS at the point that you started giving that advice. And the reason you want to avoid transferring to something that isn’t a QROPS, is that you’re going to face unauthorised payment charges, which could be up to 55% for the member and the scheme can also face a sanction charge.
So what is a QROPS? Well, HMRC is very, very cautious these days and only publishes a list of recognised overseas pension schemes and it then confirms that something which appears on that list is capable of being a QROPS, but only if it meets further additional requirements. And those are undertakings to do various things such as complying with a range of UK pensions tax rules. And there are also undertakings to do things like report to HMRC in respect of certain aspects. So it’s quite a burden on an overseas pension that it’s not only got to comply with its local tax and pension rules but it’s then also got to comply with certain aspects of UK pension rules. And HMRC puts all of the responsibility for determining that an overseas pension scheme is indeed a QROPS, the whole due diligence process, onto the adviser and the transferring scheme.
So if you do a transfer to a QROPS, this is basically the only situation when a transfer is going to trigger a benefit crystallisation test for lifetime allowance purposes, and that is BCE8 when the fund transfers to the QROPS, but of course only if the amount being transferred to that QROPS exceeds the member’s available lifetime allowance at that point, and that’s when you get an LTA charge. And the LTA charge in this case is always on the basis of 25% deducted from the fund, and that would normally be by the transferring out scheme. The test applies to both uncrystallised funds and if the member was under age 75 and is transferring out crystallised funds that have been put into drawdown, the BCE8 test also applies to those funds. And it’s conducted on, as you would expect, a very similar basis to the age 75 LTA test, just looking at the growth since those funds were put into drawdown.
We’ll look at a couple of examples. Cliff transfers £800,000 to a QROPS in June 2017. He’s age 50, so he’s triggering BCE8. He hasn’t had any previous benefit crystallisation events, so this is tested against 2017/18 lifetime allowance of £1 million and he uses up 80% of the lifetime allowance at this point, and that doesn’t trigger a lifetime allowance charge, so he’s fine.
Daisy has a bit more funds to transfer to a QROPS in June 2018, this tax year. She’s age 68 and she’s transferring – so she’s triggering BCE8. She isn’t caught by the overseas transfer charge, which we’ll be looking at next. She does have fixed protection 2012, so her protected lifetime allowance is £1.8 million. She hasn’t had any previous BCEs. So the excess over her protected lifetime allowance is £500,000. So the scheme will deduct the 25% lifetime allowance charge from the excess element, so that’s a deduction of £125,000. And following that, the UK provider will transfer the balance of £2.175 million to her chosen QROPS.
Overseas transfer charges came in a couple of years ago. It looks like the Treasury thought that this wouldn’t actually manage to discourage people from transferring and was expecting it to actually bring in quite a lot of tax. Given the fact that people are possibly a little bit more clued up than the Treasury thought, it’s actually bringing in less tax than expected, but you would then expect that the Treasury will actually be satisfied with that, because it means that more people will be paying lifetime allowance charges in the UK, which was one of the reasons why people were possibly thinking about transferring overseas before the overseas transfer charge came in. It’s also 25% where it applies, so to work out the charges correctly, you always work out if there is a BCE8 LTA charge first. If there is, that’s calculated and deducted first. And then secondly you calculate your overseas transfer charge.
So if we work through that in an example. Leif considers transferring his ££1.23 million uncrystallised personal assets pension to a QROPS in July of this tax year. He’s got a £1.03 million available lifetime allowance, that’s the standard allowance for this year. He’s not eligible for fixed or individual protection, and his circumstances are such that an overseas transfer charge would actually apply. So first of all you work out the lifetime allowance charge. You deduct the standard lifetime allowance from the amount you’d be transferring, so from £1.23 million you deduct £1.03 million, that gives a £200,000 excess, the 25% lifetime allowance charge comes out at £50,000. To work out the overseas transfer charge, start with his transfer value. You deduct the £50,000 lifetime allowance charge, which leaves you with £1.18 million. You apply the 25% overseas transfer charge to that, and that comes out at £295,000. I suspect Leif isn’t going to go ahead, because his £1.23 million after those two charges gets reduced down to £885,000, so he might think again.
The overseas transfer charge doesn’t apply in a whole range of circumstances, which do allow people to still do QROPS transfers where there’s a genuine reason – you’re genuinely moving overseas. So if you’re transferring to a QROPS that’s within the same country where you’re going to become a tax resident, that’s fine. Similarly, if you’re going to become a tax resident in one EEA country, you can transfer to a QROPS in a different EEA country. EEA is the European Economic Area, so this could well change after Brexit, something HMRC cannot currently confirm. You can transfer to a QROPS if you’re going to get a job in the public service in the country you’re moving to, and that scheme is provided by your employer. And similarly, if you’re going to go and work for an international body, which means something like the EU or the UN, not an international firm like IBM, and the QROPS is the employer’s scheme. One of the things to watch out for, you have to carry on complying with all of these different rules for not having an overseas transfer charge for a full five tax years after leaving the UK. So if you leave the UK in, for example, May of a tax year, the period runs to the end of that first tax year plus a further five full tax years, so that would be nearly six tax years after leaving the UK. And if you breach any of these conditions within that period, you can get a retrospective overseas transfer charge.
That basically comes to the end of the technical aspects of today’s presentation. I’ll now take you through some of the resources which are also available to you. We do have, which you may have found out if you’ve logged in recently, a brand new extranet, which hopefully will be cleaner and easier to navigate than the previous version. We’ve done a lot of work on this to make life easier for you. So the resources that Financial Planning Team produces are now all under the Expertise tab, where you can access the most recent edition of Tech Talk, which we sent out in November, and that does include a range of articles which will be of interest to pension advisers. Looking at money purchase income options, which was the subject of our last masterclass. Emergency tax and pension lump sums, which we know causes endless confusion. Tapered annual allowance, another of our perennial queries about how the threshold and adjusted income calculation works. And for those of you who might be in the workplace pensions market, we’ve done a reminder of how the three-yearly cyclical re enrolment duties work. The new extranet website has all of the tools and materials that you will be familiar with. Again, you access this via Expertise and then go into Knowledge Centre. And if you go into Knowledge Centre, we’ve now got a great new search function for accessing the archive of Tech Talk articles which remain useful for you. And of course you can also access our archive of masterclasses, including subjects such as retirement income planning, pensions tax relief, and for workplace advisers we’ve also had a session looking at some of the automatic enrolment issues. And I’m now going to hand over to Tom, who’s going to start looking at some of the questions which have been coming in online and will take you through some of those.
Tom Coughlan: Okay, thank you Bernadette. Yeah, we have a couple of questions that have come in. A question regarding deferred members and the pension input amount calculation. So if the client is a deferred member, does the pension input amount calculation still apply? The answer is no, because their benefits should just be being revalued in line with inflation essentially. So that should mean that all you’re getting is an inflationary increase, so there shouldn’t be a pension input amount calculation. So yes, absolutely, if you’re transferring out as a deferred member then yes, then that pension input amount calculation that I went through doesn’t apply.
Another question, this one regarding winding up transfers. “You mentioned that winding up transfers can only be transferred to Section 32. Can benefits not be transferred to a master trust?”
Bernadette Lewis: We were talking about block transfers here. So there are two types of block transfer. You could do a buddy transfer to a master trust. But if you’ve got somebody who’s in a single member scheme, then their only option is to be doing a winding-up transfer, which would be to another Section 32 plan. So, sorry if that came across as a little bit unclear from our presentation.
Tom Coughlan: I’ll now hand back to Paul for the closing comments.
Paul Rutkowski: Great. Thanks very much Tom and Bernadette. So there’s no doubt that pension transfers is a complex topic. But as we’ve seen throughout the presentation today, with many advice areas involved, your clients will only benefit from your support. Hopefully the presentation today has helped to consolidate your knowledge and maybe improve your understanding in some of the areas. If you’d like further information on Scottish Widows retirement account, in the first instance please speak to your Scottish Widows contact, or you can visit the brand new Scottish Widows extranet, which Bernadette mentioned earlier. Your Scottish Widows contact can also provide support around block transfers, whether in connection with scheme wind-ups or for an individual member. Depending on the circumstances, that could involve for example a transfer into our Section 32 plan, GPP or even Retirement Account. As with our previous masterclasses, a recording will be placed on the extranet for further review. CPD certificates will also be issued following today’s presentation for those that have attended live. My thanks once again to Bernadette and Tom for taking us through the slides. Thank you for joining and thank you for all the questions that you’ve raised. As Tom mentioned, if anything has come in since he refreshed his screen and we didn’t get to them, we will answer them directly to you. That concludes today’s presentation, so thank you very much.
Operator: This concludes today’s call. Thank you for participation, ladies and gentlemen. You may now disconnect.