Skandia has warned advisers to be cautious when using block transfers to consolidate pension funds, as it could lead to their client losing the right to higher levels of tax free cash.
The company says advisers should check the date the individual joined the pension scheme which will receive the transfer. It warns if it is longer than 12 months the entitlement to convert more than 25% of the fund into a tax free lump sum will be lost during the transfer. Skandia points out the only exception to this rule is if the receiving scheme only holds protected rights (contracted out rebates) as HM Revenue & Customs (HMRC) recently confirmed this concession to the block transfer rules. Since A-Day, when HMRC confirmed entitlement to higher levels of tax free cash could be kept ...
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