Funded Unapproved Retirement Benefit Schemes (FURBS) and Employer-Financed Retirement Benefit Schemes (EFRBS)
Funded Unapproved Retirement Benefit Schemes (FURBS) and Employer-Financed Retirement Benefit Schemes (EFRBS) are discretionary trusts established for the benefit of a company’s employees and their families.
These schemes were popular in the 80’s and 90’s as they weren’t subject to the annual and lifetime pension contribution restrictions that apply to approved pension schemes. This meant that significant retirement savings could be contributed to and accrued within these structures.
The pension reforms, introduced in Finance Act 2004, meant that all existing FURBS became EFRBS with effect from 6 April 2006 (provided that they were set up to deliver relevant benefits).
If you are a member of one of these schemes and are approaching retirement age or have already retired, it is important to consider your withdrawal options and the tax implications of these.
Each FURBS and EFRBS will typically have a bespoke Deed which means the benefit options on retirement differ and depending on the terms of the Deed, the decision made by the member can also potentially increase the risk of inheritance tax anti-avoidance legislation.
For the most part, it is also safe to assume that FURBSs and EFRBSs should have filed UK self-assessment tax returns since 2006 (following the 2006 A-Day for pension taxation) on underlying investment income.
Therefore, if you are aware that your FURBS or EFRBS has not filed a tax return please speak with an adviser. This can significantly impact the income tax position of the member on a withdrawal of retirement benefits.
Food for thought
Some questions we would pose to those with retirement savings in FURBS/EFRBS structures, or to the employer or trustee of these schemes are as follows:
- Have you passed the retirement age as defined in the Deed but have yet to withdraw benefits?
- Are you a Trustee, Principal Employer or Member of a FURBS/EFRBS and are aware that contributions have been made to the FURBS/EFRBS after April 2006?
- Are you a Member of a FURBS/EFRBS and are unsure of whether the value of this fund sits within your estate for Inheritance Tax purposes?
- Are you a Trustee or Principal Employer of a FURBS/EFRBS and believe that no self-assessment tax returns for the Trust have been filed?
- Are you a Trustee or Principal Employer of a FURBS/EFRBS and believe that no tax advice has been provided to the FURBS/EFRBS recently, since 2006, or at all?
Get in touch
If you would like to speak with one of our tax specialists, please do not hesitate to get in touch.
Key contacts