Stories about former professional footballers blowing their entire pensions on gambling have appeared in the press since A-Day. These, arguably, show that the removal of the early pension age for footballers was the right decision.
This needs to be balanced against the growth of pension liberation since 2012, where individuals have been encouraged by scammers to attempt to access their pension before they reach age 55.
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.
