Despite this ability to retain protection on transferred benefits, two important points need to be considered.
Firstly, just because the legislation allows the NMPA of 55 to be retained, that does not mean the receiving scheme will have the administrative capabilities to be able to offer that earlier access.
While many businesses have systems or scheme rules in place that facilitate offering individuals two different NMPAs, some will not.
Because of this, it is worth asking the administrator of the receiving scheme whether or not the NMPA of 55 will be lost following the transfer.
And to repeat, this all applies to transfers that are happening right now, this is not only a factor that becomes relevant from 2028.
The second factor to consider is that, if the transfer from the NMPA 55 to the NMPA 57 scheme is structured correctly, any benefits held in the receiving scheme can inherit the NMPA of 55.
This will mean that all benefits in the receiving scheme can be taken at 55, not just those that are transferred.
In order to achieve this, a new version of the block transfer must be arranged.
Thankfully it is much simpler to meet the conditions for an NMPA 55 block transfer than it was to meet the NMPA 50 version.
The old requirements that are no longer relevant for the NMPA 55 version are:
- Your client only having been a member of the receiving scheme for less than 12 months; and
- The need to crystallise all benefits under the receiving scheme at the same time.
The block transfer must still involve the transfer of benefits of more than one person as part of a single transaction, and all benefits under the transferring scheme must be transferred – so no partial transfers – but those are relatively straightforward conditions to meet.
Transfers from an unprotected (NMPA 57) scheme to a protected (NMPA 55) scheme
Transfers from unprotected to protected schemes have been the subject of a little debate since the publication of the Finance Bill.
It seems that, on the day of publication, the Treasury was briefing that it would not be possible to transfer any benefits from NMPA 57 schemes to NMPA 55 schemes unless the transfer had already commenced – the closure of the so-called ‘transfer window’.
If this was/is the intent, it is not what the legislation currently achieves.
The legislation is effectively identical to that which has covered transfers from NMPA 55 schemes to NMPA 50 schemes since A-Day (April 6 2006).
That legislation does not prevent transfers of that type, and allows the transferred benefits to inherit the earlier NMPA that was already held in the receiving scheme.
