Buddy Transfer Question
We have a client with a footballers pension scheme with a protected early retirement age of 35. They are currently an active member of the scheme, in receipt of contributions from the professional footballers association.
We're looking to transfer his benefits (all arrangements under the scheme) away to a SIPP for various reasons, and we have a suitable buddy. The scheme have said they can facilitate this as a buddy transfer. As the member is still receiving contributions a new arrangement with the footballers pension scheme would then be opened, although this would not benefit from the protected early retirement age of 35.
We have two questions that we're struggling to get definitive answers on:
- Under buddy transfer rules you have to transfer all benefits at once*. If we advise him to transfer out all current benefits in the scheme, does the fact that he will start to accrue further rights in the future through the new arrangement set up for him (albeit without protected early retirement age) mean that he could fall foul of the buddy transfer rules?
* “A transfer is a block transfer if it involves the transfer in a single transaction of all the sums and assets representing accrued rights under the scheme from which the transfer is made which relate to the member and at least one other member of that pension scheme.”
- One of the potential SIPPs we are considering has already been opened and has already received contributions in. There is no protected retirement age on these contributions, but the account has been opened less than 12 months. If we do a buddy transfer to this scheme, would the benefits already in the pension attract the protected retirement age once the buddy transfer completes?
If not the implications are that he would have part of his benefits with a protected retirement age (the buddy transfer), and part without (existing contributions) – one of the rules relating to protected retirement age is that they must become entitled to all benefits under the scheme at the same time in order to take it early. If he has part of the scheme without protection he can’t take that part until age 55, and as a result can’t take any of his benefits early, effectively losing the protected retirement age.