Pensions Insight: 2 to 8 April 2024

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In this insight, we provide the latest on HMRC’s lifetime allowance removal newsletters including suggested action that trustees should take in advance of a further set of amending regulations and our usual Pensions Regulator news round-up.

HMRC latest newsletters on lifetime allowance removal and updating the Pensions Tax Manual

HMRC’s Newsletter 157 contains further FAQs on the removal of the lifetime allowance (LTA) which takes effect on and from 6 April 2024. Newsletter 158 discusses a second set of regulations that are anticipated to be laid before Parliament shortly and which will apply retrospectively to 6 April 2024 – you can read about the first set here.

Important point to note regarding further amending regulations

The second set of regulations will make technical amendments to the LTA removal legislation. They will relate predominantly to a limited group of members – members with certain LTA protections and members who wish to transfer to a qualifying recognised overseas pension scheme (a QROPS).

Newsletter 158 notes that until these regulations are brought in, relevant affected members may wish to defer taking or transferring benefits “to ensure that their available allowances and tax position do not need to be revisited later in the year”.


HMRC notes that “schemes should ensure that members are aware of the need for further legislative changes”. Therefore, trustees should liaise with their scheme administrators to make relevant members aware that additional statutory changes are going to be made and recommend that they obtain independent financial advice.

Newsletter 157 covers:

  • the payment of the new pension commencement excess lump sum (PCELS) confirming that, although a PCELS must be connected to entitlement to a pension there is no requirement for a minimum level of pension, albeit a member must have taken at least £1,073,100 of pension benefits because of the way the PCELS operates;
  • payment of an uncrystallised funds pension lump sum;
  • event reporting; and
  • transitional tax-free amount certificates (a TTFAC).

Newsletter 158


Amending regulations will provide that lump sums that are paid under a TTFAC which is subsequently revoked are not unauthorised payments, albeit they may need to be taxed. They will also require individuals to tell all their schemes that they are relying on a TTFAC to ensure that schemes are aware of this and can provide correct details to members.

Enhanced protection (EP) and transferring to a new provider

The new regulations will allow individuals with EP to transfer benefits to a new provider and keep their protection – at present, they lose protection because their permitted maximum works on a ‘per arrangement basis’.

Until the regulations are brought in, HMRC suggests that members with EP may “wish to delay transferring to a new provider”.

EP and primary protection (PP) – protected lump sums

In keeping with policy intent, the amending regulations will allow for members with EP or PP with protected lump sum rights above £375,000 to receive a pension commencement lump sum (PCLS) above their permitted maximum. The legislation does not currently allow this.

Until the amending legislation is in force, HMRC says that members can either:

  • take a PCLS up to £375,000 and give up their protected entitlement because any further lump sum would not qualify as a PCLS; or
  • hold off taking the PCLS so they can be provided with their total entitlement – this is possible because a PCLS can be taken between 6 months before and up to 12 months after entitlement arises.

Lump sum death benefits (LSDBs) from pre-6 April 2024 funds

The second set of regulations will correct the unintentional position that payment of LSDBs from pre-6 April 2024 crystallised funds are not tax-free. Until they are effective, legal personal representatives may “wish to delay requesting the payment of a lump sum death benefit where the payment would be made from funds which crystallised prior to” 6 April 2024.

QROPS transfers

The first set of amending regulations provided that a member’s overseas transfer allowance (equivalent to the £1.073m lump sum death benefit allowance) would reduce by 100% of any LTA used up before 6 April 2024. However, issues have been spotted regarding double deduction from the overseas transfer allowance for drawdown funds and failing to include pre-A Day pensions in payment in the reduction calculation and the position needs to be rectified.

Until the regulations are effective, HMRC says that affected members may wish to defer any transfer request.

Scheme-specific lump sum protection

The forthcoming regulations will remedy issues identified with the formula for calculating the additional lump sum amount for members with scheme-specific lump sum protection. The issues relate to double counting, reductions to the lump sum allowance and transfers.

Although impacted members could still transfer, HMRC notes that they may wish to delay the payment of a PCLS under scheme-specific lump sum protection until the regulations are in effect.

Other topics covered

These include Financial Assistance Scheme and Pension Protection Fund tax treatment and the public sector McCloud remedy.

Further HMRC guidance

HMRC’s Pensions Tax Manual is being updated to incorporate the LTA removal changes. HMRC will continue to provide LTA removal guidance in future newsletters and specific LTA updates where relevant. A consolidated copy of all FAQs to date will be published in a future April 2024 newsletter.

Pensions Regulator round-up

Updated guidance to take account of general code of practice

On 28 March 2024, the same day that the new general code of practice came into effect, the Pensions Regulator (TPR) updated several pieces of guidance including:

TPR progress on LDI crisis and financial stability

TPR has welcomed a Bank of England’s Financial Policy Committee report that provides an update on LDI resilience following the September 2022 market volatility and notes the positive steps TPR has taken in response to the Committee’s recommendations on improving leveraged LDI resilience. TPR actions include producing LDI guidance, monitoring LDI resilience, improving data collection, doubling the number of investment consultants at TPR and recruiting a senior economist to “better gather market intelligence” and “understand…potential emerging risks…”.

The press release also included a January 2024 letter from TPR to the Governor of the Bank of England which summarises TPR’s response to the Committee’s recommendations.

EDI blog

TPR’s 26 March 2024 Equality, diversity and inclusion (EDI) blog discusses TPR’s gender pay gap report and provides three top tips for trustees wishing to improve EDI:

  • Tip 1: consider the broader pension industry to see what good practice already exists in the marketplace including sponsoring employer practices;
  • Tip 2: utilise TPR’s EDI guidance; and
  • Tip 3: recognise that everybody has a part to play in improving EDI – this includes having a strategy or action plan for your scheme.

DB funding and investment regulations came into force on 6 April 2024

April has been a busy month not just because of the removal of the LTA - the new funding and investment regulations came into effect on 6 April 2024. The revised defined benefit funding regime will apply to scheme valuations with effective dates on and from 22 September 2024. You can find out further information here.

Commencement and transitional regulations came into force on 6 April 2024 – these bring into effect relevant changes to the funding provisions in the Pensions Act 2004 and provide that the pre-6 April 2024 regime continues to apply to schemes until they are required to obtain a valuation and produce a funding and investment strategy under the new regime.

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