“There is an issue with the provision that provides for the for the transfer balance cap debit [in these situations]. What actually happens is it will produce a nil debit. So if you’re commuting one of those pensions that’s capped defined and rolling it into a new market-linked pension that’s not, you’ll get a credit, a nil debit and then another credit. This might cause issues for clients if they go into excess,” she explained.

“We’ve been working on this and we recognise that wasn’t the intention of the explanatory memorandum. We’ve been looking at the commissioner’s remedial powers and seeing if that’s possible to apply and talking to Treasury.”

Treasury and the government recognise the unintended consequences associated with the current law and have stated that they committed to ensuring the smooth implementation of the 2016 reforms.

“I would suggest that if you have a client in this situation who wants to commute, then perhaps stop and rethink before you get into that situation, or if it has happened already then you’ll need to watch this space,” she said.