How the worlds of sport and pensions collide

  • Describe the situation with footballers and their pensions
  • Explain how protected ages and pensions work
  • Describe some of the unusual investments you can put into a Sipp and Ssas

The decades-long gap between the end of a football career and the NMPA means that former footballers have been a target of the pension liberation scammers.

Protected pension age

Advisers with clients holding protected pension ages also need to be aware of a number of technicalities in the pension rules which can have an impact.

Perhaps the most important, because it can result in the complete loss of the protected pension age, is the need for transfers to be made as a block transfer.  The block transfer rules require a number of basic conditions to be met.

The best known of these is that the transfer must involve benefits being transferred for two or more persons. So if a client with a protected pension age transfers their benefits to another scheme on their own, their protected pension age will be lost.

Further requirements are that all the sums and assets held in the transferring scheme must be transferred; the transfers must be made under a single agreement (although this does not mean that all assets must be transferred on the same day); and the member holding the protected pension age must not have been a member of the receiving scheme for more than 12 months.

One wrinkle in the rules, which was subject to a welcome change in 2014, was that the protected pension age was lost on a non-block transfer even if the client had already crystallised the benefits they were transferring.

Until the rules were changed, the continuation of pensions paid using a protected pension age following a non-block transfer would have been unauthorised payments. Thankfully HMRC has now changed this rule meaning that pension payments can continue following any recognised transfer without the risk of tax charges applying.

In addition to the block transfer requirement, sportspersons benefitting from a protected pension age must also crystallise all of their benefits under the pension scheme where protection is held.  Partial crystallisation is not permitted.

This rule is applied at individual pension scheme level, so if a sportsperson has multiple pension schemes but only holds protection in one of them, they just need to crystallise the benefits in that one scheme to retain the protection.

In many cases it may make sense to transfer the non-protected pension age benefits into the scheme which holds protection, as this can mean the protection can be applied to all of those benefits. 

The same principle applies to contributions.  If these are made to the scheme where a protected pension age is held, they will also benefit from the protection.

Care is needed around these transfers and contributions where the client only wishes to partially crystallise their pension benefits, for example they might only want to crystallise up to their lifetime allowance.


Questions appear on the last page of this article.