A change to pension anti-forestalling rules could restart the pension transfer market for high earners.
HMRC has relaxed its initial rules, which have crippled the transfer market among the wealthy since April.
The changes to pension tax relief, announced in last year's Budget, introduced rules which meant high earner transferring their pension arrangement to a new provider would lose their contribution history and be forced to pay tax.
Those earning over £130,000 a year would only have been able to claim tax relief on a maximum of £30,000 without a regular contribution history. The pensions industry had criticised HMRC's original decision to disregard contribution history when a high earner switched scheme or provider.
However, today's legislation, SI2010/429, means pension contribution histories will be maintained. SIPP providers are hopeful this will re-open the pension transfer market for high earners, which shut down in April following the introduction of anti-forestalling rules.
High earners will be able to protect their contribution history when transferring their money to another pension arrangement, provided they conform to some rules.
The new pension arrangement must be started within 3 months of the old arrangement ending and payments must be made at least quarterly.
However, high earners will only be able to make a single switch and protect their pension. Any further switches will result in the loss of any contribution history.
Richard Mattison, business development director at The IPS Partnership, says: "This was yet another oversight by HMRC which has thankfully been rectified.
"However, we are quite late in this tax year already, and it will be tough for high earners to switch their pension before April."
Cautious, Balanced & Dynamic Growth
Cowardly, boring or sensible
Latest news and analysis
‘Most significant’ upgrade since launch
Changes happening over coming months