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.
If the pension benefits have all been brought together this will not be possible, whereas if they have been kept separate it will be – although the trade-off is that client will need to wait until they reach age 55 before crystallising the benefits held in the non-protected scheme(s).
A final note for advisers to be aware of around protected pension ages is how lifetime allowance usage is measured.
Back in the run-up to 2006 HMRC decided that the earlier age at which those with protected pension ages were able to access their pension meant the benefits had a higher capital value.
As a result it chose to increase the impact of crystallising these benefits on an individual’s lifetime allowance. So, for each complete year before an individual is due to reach age 55, their lifetime allowance is reduced by 2.5 per cent.
This treatment of the capital value made sense in the days when most pension benefits were taken as a secure income (a lifetime annuity or scheme pension) but, in the pension freedoms world, it now makes less sense.
A drawdown pot of £800,000 is worth £800,000 regardless of the age of the individual when it is created.
Pensions and sports - Investments
Moving on from pension benefits, another area where the sports and pension worlds collide is around investments.
Holding commercial property has been one of the cornerstone investments in Sipps and Ssas's since they were first created. A typical commercial property held in a Sipp is an office building, warehouse or retail unit.
But more unusual properties are often seen, sometimes with a link to the sporting world. I am aware of Sipps which either do own, or have owned, a football league stadium, a cricket ground, and for those with an interest in motorsports, a go-karting track. We are not talking about Wembley, Lords or Silverstone, but interesting nonetheless.
Queries about owning land with the right to earn income from sporting rights within a Sipp or Ssas are also surprisingly common. For those unfamiliar, sporting rights are those which allow people to hunt, shoot or fish on a piece of land.
