Arrangements

Omni is designed for administrators who want to use the minimum number of arrangements.

For many members, there will be a single arrangement and the whole of their funds will be in that arrangement. The administrator does not then need to think about arrangements.

The legislation forces administrators to use separate arrangements for:

1. the part of the fund relating to funds vested in the scheme before 6^th April 2006

2. all transfers received after 5^th April 2006 from other schemes that were already in drawdown

Omni assumes that administrators will want to do the minimum necessary to comply with this legislation. In particular, it assumes that there will be one common investment portfolio across all those arrangements.

There is no requirement for a separate arrangement for protected rights and so Omni treats the protected rights as a separate sub-fund within the normal arrangement (either vested or not).

In many situations there is no real reason for keeping the arrangements separate (the legislation could have achieved the same result in a much simpler way).

The main area in which the separate arrangements will be important is the calculation of lifetime allowance used (and any lifetime allowance charge) at the BCE5A.

The BCE5A takes place when a member reaches age 75 with drawdown funds and a similar process happens when an annuity is bought using drawdown funds. The amount of lifetime allowance used is any increase in the value of the arrangement since vesting. It is necessary to know the value of that arrangement when the original BCE(s) took place (in the original scheme).

If the member does not want to draw the maximum pension, it can be beneficial to draw the maximum from the funds that will have a BCE5A and the balance from arrangements that will not have a BCE5A (native pre 2006 funds or transfers in drawdown).

Pension payments. Each pension payment has to be allocated between the various drawdown arrangements (even if the allocation is simply in proportion to the fund value of each drawdown arrangement). A record of the allocation needs to be kept so that the overall fund value can be allocated between the arrangements. The ‘Pre 2006 amount’ shows the part of the pension payment that has been derived from funds that were vested before 6^th April 2006 – it does not relate to pensions payments that were actually made before A day.

If a member wants separate investments for different arrangements then it is best to set up another plan within the SIPP and treat this as a separate scheme within Omni. A separate bank account will be needed to process all transactions from the separate investment portfolio and there will be separate pension payments.

This method of implementation keeps the screens simple for the vast majority of members who just have one arrangement.

Extra Arrangements. However, there are circumstances where you may be forced to use separate arrangements e.g. where a transfer is received from a scheme that created a separate arrangement with each BCE. Omni allows you to set up these extra arrangements buut they should only be used as a last resort. Full details can be found in Extra Arrangements