The Taxation of Pension Schemes Transitional Provisions Amendment Order No. 2990 makes transitional provision to allow pension schemes to make greater reductions in pensions than would otherwise be the case and amends the existing transitional provisions to simplify a complex calculation relating to transitional protection of rights to receive certain tax-free lump sums.

Where a pension scheme member's rights under the scheme increase at a faster rate than the lifetime allowance, the member may also be entitled to receive an additional lump sum tax-free, but only where “relevant benefit accrual” has occurred.

Representations were made that this could result in the administration of the pension scheme being too complicated and in particular that it was often difficult to determine when relevant benefit accrual had occurred in respect of a defined benefit arrangement. The Finance Act 2008 removed the conditions that there had to be a relevant benefit accrual before the member could be entitled to an additional lump sum tax-free and this Order brings the Finance Act amendments into effect.

Full details of the Order is available at
http://www.hmrc.gov.uk/si/2008-2990-em.pdf