Lump Sums Paid to Pension Scheme Members
HMRC published its view on the tax and National Insurance treatment of lump sums paid to pension scheme members in return for giving up their benefit rights.
Some employers have offered or are offering inducements or incentives (inducement payments) to members of defined benefit occupational pension schemes to agree to a reduction in their benefits or to a transfer out of the defined benefit scheme to a defined contribution scheme.
HMRC has been asked for advice by a number of different employers on the taxation and National Insurance (NI) position of those inducement payments. Their views reproduced at Section 2.10.