Sep 2000 404-1 Q4 (ii)

I'm having a go at past papers to get a feel for what examiners are looking for (I know I might have more luck predicting the winning lottery numbers), even though the old ones are of limited use given all the changes since (to regulations, exam format etc)

Anyway this raised an interesting issue:

Question says :"The Trustees have written to you to calculate the transfer amount and to confirm that they should pay it to the purchaser"

This is in relation to a sale where you are the seller's plan actuary.

Any reason for the examiners' solution to say nothing about whether they can pay to purchaser? I thought this was being specifically asked for.

Also, in current environment, can this be done? Or can transfer payments from approved schemes be made only to another approved pension arrangement? Or to sponsor and/or other party (to me purchaser isn't sponsor of old scheme) subject to tax and only once certain funding requirements are met?

PS: Also examiner's comments say more marks were available for describing the points in more depth. I would like to think that many candidates did more of a "list" rather than "outline" requiring lots of in depth descriptions.

 

Hi Didster

I agree the wording in this question is a little confusing.

I think the reference to whether the trustees should pay the bulk transfer amount out of their scheme is asking you to consider GN16 and consent issues (which are covered in the Examiners' report).

I also think there is a "slip" in the wording when reference is made to paying the bulk transfer to the purchaser. I think the Examiners are really meaning payment to the purchaser's scheme - in the normal way of these situations. I appreciate this isn't too clear though.

I also, personally, agree with your thought that the majority of candidates will have gone for the "list more things in less detail rather than fewer things in more detail" to score the marks. The Examiners did say after all that the question was answered well on the whole. Paper 1 of 404 is also the less in-depth of the two papers.

Hope this helps. Good luck with the rest of your revision and the exam!

Elizabeth

 

Thanks Elizabeth,

Was I also right in thinking that the Regulators/tax authorities in current regime wouldn't allow a registered pension plan to make payment (eg TV) to non registered pension plans (say purchaser who is a sponsor) unless it is treated as a refund of surplus to a sponsor and subject to usual restrictions (eg well funded, taxable etc)

 

Hi Didster

Yes, your reasoning is correct. Basically the regime says payments can't be made from registered schemes to anything other than registered schemes pretty much.