While changes to pension legislation tend to be widely reported and forensically analysed, every now and then something slips under the radar.

One of the things that has always annoyed me about the pension rules is the issue of protected tax-free cash sums.

Before the implementation of the pensions simplification rules on 6th April 2006 there were a number of different sets of pension rules, one of which allowed those with company schemes to have a tax free lump sum of more than 25% of their fund.

What's more, no election was necessary; it was an automatic entitlement, but with the proviso that it would only apply if retirement benefits were taken from the original scheme. Effectively this meant that anyone wanting to take a higher tax-free lump sum couldn't elect to transfer to income drawdown because this would mean that their lump sum would revert to the new calculation of a simple 25% of the fund.

I have always felt that that was unfair as it denied choice. However, the new rules have introduced a temporary amnesty, which hasn't, as far as I'm aware, been mentioned in the media. While the circumstances under which the amnesty will apply are very restricted it's still an important concession for anyone over the age of 55, the minimum age for drawing benefits.

To be covered by the new legislation, the transfer must take place on or after 19 March 2014 and before 6 April 2015 and the member must be entitled to take their benefits immediately.

What this effectively means is that anyone over 55 with a protected lump sum can transfer to an income drawdown plan before April and take the higher lump sum immediately while deferring income.

By taking advantage of this temporary loophole they will be able to maximize their tax-free lump sum while still having maximum flexibility in terms of future income payments. What's more, they'll be righting an 8-year-old legislative wrong.

As I said, the amnesty won't have widespread application but it's certainly well worth knowing about, yet most advisers seem oblivious to its existence. It's a good job we're on the ball!

Robin Sainty APFS M.A. (Cantab)