If there is a chance that they won’t be treated as crystallised benefits, that would be a material factor in upcoming decisions over my own (thankfully smaller) tax bill. How official, and how tentative, are the ‘may’ and the ‘possibly’?
Having done some more reading, the HMRC online tax manual (
https://www.gov.uk/hmrc-internal-man...nual/ptm056460) suggests that Scheme Pays would not be a Benefits Crystallisation Event and that the payments are handled via a 'notional negative DC account'. The tax reductions (I think!) would arise from the reduced benefits which translate for a Defined Benefits scheme into a lower equivalent LTA.
My understanding is that you would need to request Scheme Pays with AFPS (via DBS) by 31 July 2021 for the tax year to Apr 20. You should before then have notified an interest and asked for the scheme's proposed reduction of your benefits so that you can see what the impact will be before you have to make an irrevocable decision for the year concerned.
Caveat: I am not an expert in pensions and tax, so my interpretation may be wrong! It would be sensible for people to do their own research, but make sure you get independent advice from a suitably qualified person before you make any decisions.