Before the simplification of pension tax law in April 2006 (commonly called "A-Day"), UK company directors and senior executives had access to a range of bespoke pension arrangements that could provide far more generous benefits than ordinary personal pensions. The most prominent were Executive Pension Plans (EPPs) and Funded Unapproved Retirement Benefit Schemes (FURBS). Many of these arrangements remain in force today, and understanding their legacy characteristics is essential for anyone who holds one.

This guide explains how EPPs worked, what transitional protections are available, how EPPs interact with modern pension tax rules, and the specific tax treatment of FURBS for those who still have funds in them.

This article reflects legislation as at June 2026. The rules for legacy pension arrangements are complex and this guide is for information only. It does not constitute regulated financial advice.

What Was an Executive Pension Plan?

An Executive Pension Plan (EPP) was a form of occupational pension scheme arranged for one or more directors or senior employees, typically through an insurance company or specialist provider. Unlike a company DB scheme covering the entire workforce, an EPP was a targeted, individual arrangement set up specifically to provide significant pension benefits to key individuals.

EPPs typically offered:

Higher contribution levels than standard personal pensions (based on the pre-A-Day "earnings cap" and "net relevant earnings" rules, but with scope for large employer contributions).
Generous benefit limits — up to two-thirds of final salary as a pension, with up to 1.5× final salary as a tax-free lump sum, for members with sufficient pensionable service.
Early retirement provisions — benefits could often be taken from age 50 (pre-A-Day rules).
Waiver of premium — some EPPs included built-in income protection for the employee if illness prevented contributions.
Death-in-service lump sums of up to 4× final salary, tax-free.

Because EPPs were occupational schemes, they were approved by HMRC under the pre-2006 regime. This distinguished them from personal pensions, which had different (and lower) contribution and benefit limits.

A-Day (6 April 2006) and the Transition

The Finance Act 2004 replaced the existing patchwork of pension tax regimes with a unified framework from 6 April 2006. The key changes:

The Lifetime Allowance (LTA) of £1.5 million (rising over time) replaced the old benefit limits.
The Annual Allowance (AA) of £215,000 (rising over time, subsequently cut and reformed multiple times) replaced the old contribution limits.
All occupational and personal pension schemes were brought into a single "registered pension scheme" category.

For EPP holders, the A-Day transition created two important issues:

Benefit limits: EPP members whose accrued rights exceeded the new LTA needed primary protection or enhanced protection to preserve those rights without a tax charge.
Pre-commencement pensions: Members who had already started drawing their EPP pension before A-Day retained their legacy benefit rights under the transitional rules.

Transitional Protections

Enhanced Protection

Enhanced protection allowed members with benefits above the LTA to freeze their pension savings at their A-Day value. No new contributions could be made after A-Day, but all accrued rights were protected regardless of their eventual value (there was no LTA cap on enhanced-protected benefits). Enhanced protection was particularly valuable for EPP holders with rapidly growing policies.

Enhanced protection is permanently forfeited if any new pension contributions are made after A-Day to any registered pension scheme. Many holders of enhanced protection have structured their affairs to avoid any pension contributions since 2006 — for two decades in some cases.

Primary Protection

Primary protection allowed the LTA to be set at the individual's actual benefit value at A-Day, if that value exceeded the standard LTA. It did not prevent future contributions but ring-fenced the pre-A-Day benefit.

Pre-2006 Scheme Pension Rights

Some EPP members who were already in receipt of pension income at A-Day retained the right to receive the pension on the original scheme's terms — including benefit levels that exceed what the post-2006 registered pension scheme rules would allow. These are sometimes called "pre-commencement pensions" or "grandfathered rights."

Post-2023: LTA Abolition

The Lifetime Allowance was formally abolished from 6 April 2024. In its place are the Lump Sum Allowance (LSA) of £268,275 and the Lump Sum and Death Benefit Allowance (LSDBA) of £1,073,100. For EPP holders with enhanced or primary protection, transitional provisions now apply to the new allowance framework — broadly, protecting the lump sum entitlement at the level it would have been under LTA protection. Taking specialist advice on the interaction between legacy protections and the new allowance framework is strongly advisable.

How EPPs Interact with SIPPs

Many EPP holders have subsequently accumulated a SIPP alongside their EPP — either through personal contributions, employer contributions in a later career, or through consolidation of other pensions.

Key interaction points:

Annual allowance: Contributions to any registered pension scheme (EPP or SIPP) are tested against the annual allowance. If the EPP is still accruing (unusual post-A-Day), the pension input must be included.

Carry forward: If the EPP has been paid out and is now in drawdown, it does not generate annual allowance usage. However, if flexible income is drawn from the EPP, the MPAA may be triggered — limiting future SIPP contributions to £10,000.

Consolidation: It is technically possible to transfer an EPP into a SIPP, subject to the scheme rules and tax consequences. However, for EPP holders with enhanced or primary protection, any transfer must be very carefully structured to avoid inadvertently forfeiting those protections. In most cases, leaving the EPP in situ and managing it alongside a SIPP is preferable.

What Were FURBS?

A Funded Unapproved Retirement Benefit Scheme (FURBS) was a trust-based pension arrangement for one or more executives that was deliberately not approved by HMRC. In exchange for being unapproved:

Employer contributions to a FURBS were a taxable benefit in kind for the employee — the employee paid income tax on employer contributions in the year they were made.
Investment growth within the FURBS fund was subject to income tax and capital gains tax within the trust, at the trust rates applicable at the time.
Benefits on retirement were paid free of income tax — having already been taxed at the point of contribution.
Death benefits could be paid flexibly to a broader range of beneficiaries than approved schemes.

FURBS were popular in the 1990s and early 2000s for high earners who had exhausted their approved pension limits (particularly those subject to the earnings cap, which limited the salary on which approved pension contributions could be based). A FURBS allowed the employer to contribute additional sums that, while taxable upfront, grew within the trust and were ultimately paid out tax-free.

FURBS Post-A-Day

A-Day created problems for FURBS. FURBS were effectively grandfathered as "employer-financed retirement benefit schemes" (EFRBS) under the Finance Act 2004 framework. They could not become registered pension schemes without a formal conversion, and the tax treatment of existing FURBS was preserved.

Key points for existing FURBS:

Funds already in a FURBS (where income tax was paid on contributions) continue to be payable tax-free on retirement, in accordance with the original arrangement.

New contributions to FURBS after A-Day are subject to tighter rules under the EFRBS framework — specifically, the "disguised remuneration" legislation introduced in Finance Act 2011 (Part 7A ITEPA 2003) targeted EFRBS as a potential tax avoidance mechanism. Arrangements involving new EFRBS contributions post-2011 face substantial PAYE and NIC charges.

Existing FURBS with pre-A-Day funding are not generally affected by the disguised remuneration rules if they were established and funded before the relevant dates. However, this is a highly technical area and HMRC scrutiny of legacy FURBS arrangements is ongoing.

Trust investment and administration: FURBS are discretionary trusts. The trustee has ongoing obligations — investment management, trust accounting, annual tax returns (the trust pays tax on income and gains), and trustee decision-making on benefit payments. Many FURBS are administered by specialist pension trustees; the costs are ongoing.

IHT treatment: FURBS funds sit outside the member's estate for IHT purposes, as they are held in discretionary trust. Post-2027, the IHT changes applying to registered pension schemes do not automatically extend to FURBS (which are not registered schemes). However, the position for EFRBS is complex and specific legal advice is essential.

Practical Steps for EPP and FURBS Holders

Locate all legacy arrangements — EPP policy schedules, FURBS trust deeds, and original benefit illustrations.
Check whether enhanced or primary protection was registered — and whether it remains in force.
Obtain a current valuation of both the EPP and any FURBS fund.
Review the interaction with the post-LTA allowance framework — particularly if you have or are approaching the lump sum allowance.
Take specialist advice on the FURBS tax position and ongoing trust obligations.
Consider consolidation options very carefully — always model the consequences before acting.

How Global Investments Can Help

Global Investments has deep experience advising clients with legacy EPP and FURBS arrangements. These are among the most technically complex pension structures in the UK, and the interaction with post-A-Day and post-LTA rules requires expertise that many generalist advisers do not possess.

We work with specialist pension lawyers and tax advisers to provide a complete picture of the options — whether to consolidate, continue, or wind up legacy arrangements — and to ensure that transitional protections are preserved where they add value. If you are a senior executive or company director with a legacy pension structure from the pre-2006 era, a thorough review could save very substantial sums.

This article is for general information only and does not constitute regulated financial advice. Legacy pension arrangements are governed by complex legislation that has changed substantially over time. HMRC scrutiny of unapproved arrangements is ongoing. Always seek specialist regulated and legal advice before taking any action with EPP or FURBS arrangements.

This guide is for general information only and does not constitute financial, legal or tax advice. Pension rules, tax rates and programme details change; verify current requirements with a qualified and FCA-regulated pensions adviser before acting. Pension transfers involving defined benefits over £30,000 require regulated advice.

Executive Pension Plans and FURBS: A Guide to Legacy Arrangements