HMRC has published guidance relating to the extended time period members have to access their pensions following this year’s Budget announcements.

For a pension commencement lump sum to be paid tax-free, a saver must within certain time-limits, have a pension associated with the lump sum. The changes described in this guidance allow the saver longer to decide how to access that pension.

HMRC said these special rules are temporary and a saver will need to take their PCLS before 6 April 2015 and the associated pension before 6 October 2015 for these rules to apply. Depending on how the individual wants to access their remaining pension savings after taking a PCLS, they may have to wait until further new rules take effect from 6 April 2015.

The guidance covers Finance Bill changes that will allow the pension associated with a PCLS that is paid before 6 April 2015 to be paid no later than 5 October 2015, in respect of a money purchase arrangement.

Further, funds intended to provide a pension associated with a PCLS that is paid before 6 April will be allowed to be transferred to and paid from a different scheme to the PCLS in respect of a money purchase arrangement. Changes will also ensure that where the associated pension is paid from a different scheme to the PCLS, any right to a protected pension age or protected lump sum is preserved as part of the transfer.

HMRC also said members who have received a PCLS before 27 March 2014 will be allowed to commute the uncrystallised expected pension to a lump sum under the trivial commutation or small pots rule.

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