The Finance Bill 2021-22 was published on 4 November 2021. A draft of the Bill had previously been published for consultation in July and this included measures on increasing the Normal Minimum Pension Age (NMPA) and extending the time limits for “Scheme Pays” in certain circumstances. These measures have been carried through into the Bill itself, although a number of changes have been made to align the legislative effect more closely with the policy intention.
NMPA will increase to 57 from 6 April 2028, unless an individual has a protected pension age or is a member of the firefighters, police or armed forces public service schemes.
An individual who, immediately before 4 November 2021 (or following the completion of a transfer, provided that it was requested before that date), is a member of a scheme whose rules at 11 February 2021 conferred an unconditional right to draw benefits before age 57 will qualify for a protected pension age (PPA55). Where such conditions are met, a member’s right to draw benefits before 57 will be maintained, applying both to existing rights and future rights that accrue under the scheme.
The original (draft Finance Bill) wording would not have carried over a PPA55 for any transfers that took place before 5 April 2023. This has now been changed (corrected).
Members will retain a PPA55 on transferred and future rights following a block transfer to a new arrangement.
Where a transfer is made that does not meet the conditions for a block transfer (and this would include bulk transfers of defined contribution rights while retaining defined benefit rights in the original scheme), the position is more complicated:
Existing (younger than age 55) NMPA protection will continue provided that the conditions explained in HMRC guidance are met. The conditions under which pre-55 protection can be maintained are more onerous than for the new protection proposed and protection is always lost on an individual transfer. There is no alignment of the regimes.
Members meeting certain criteria can request their scheme to meet the Annual Allowance charge, a process known as “Scheme Pays”. One of the criteria is that the member must make the request within just under 16 months of the end of the tax year in which the charge arose. The Bill will extend this deadline in circumstances – referred to by HMRC as a “retrospective change of facts” – that will be prescribed in yet-to-be-published regulations. Where the regulations apply, the later deadline will be three months from when the scheme gives the member information relating to a change to their pension input (or six years after the end of the tax year in question, if earlier). There will also be consequential extensions to the deadlines by which the scheme must report and pay the charge. This follows the government’s endeavours to resolve the age discrimination found in its 2015 public service pension reforms, but the extension is not restricted to such members. The policy paper states that the measure will be operative from 6 April 2022, backdated to 6 April 2016.
