PTM108000 - Transfers: Transfer of pensions in payment with a protected pension age

Glossary PTM000001

A member’s pension can start to be paid as an authorised payment before the normal minimum pension age if the member has a protected pension age (see PTM062200). Where the conditions to use a protected pension age are met it acts to authorise every pension payment paid to the member from the protected scheme up to the normal minimum pension age.

Paragraph 22(5) & (8) or paragraph 23(5) & (8) schedule 36 Finance Act 2004

If a member transfers benefits from a protected pension scheme the protected pension age will be lost unless the transfer is a block transfer (see PTM062240). This mean that if sums and assets representing a pension in payment are transferred and the transfer is not a block transfer there will be no protected pension age under the scheme receiving transfer. If the transfer took place before 6 April 2015 any pension paid before the member reaches normal minimum pension age will be an unauthorised payment.

Paragraph 23ZA schedule 36 Finance Act 2004

If a recognised transfer of a pension in payment using a protected pension age is made on or after 6 April 2015 the position is slightly different. Unless the transfer is a block transfer the member will still not be able to transfer their protected pension age from the transferring scheme to the receiving scheme. However, where the transfer took place on or after 6 April 2015 paragraph 23ZA schedule 36 Finance Act 2004 acts so that where both:

  • all the member’s pension in payment is transferred to the new scheme
  • all the sums and assets transferred are covered by the protected pension age

the member is treated as having satisfied the requirement to have reached normal minimum pension age in respect of the transferred funds. As a result, any pension that continues to be paid by the new scheme whilst the member is below the normal minimum pension age will be an authorised payment (unless any other breach causes the payment to be classed as unauthorised).

This provision is ring-fenced to the transferred funds. It does not cover any other sums and assets already in the scheme or that are subsequently put in to the scheme either by contribution or transfer.