RPSM12200032 - Member Pages: Information requirements and Administration: Information the scheme member is required to give to the scheme administrator

Pension commencement lump sum

There is a cap on the total amount that a member can receive as tax-free lump sums from all registered pension schemes in their lifetime.

Because of this, when any benefits come into payment from a scheme and the cap on the total amount of tax-free lump sums may be exceeded, the scheme administrator of that scheme needs to know the available portion of your lump sum allowance in case they have to limit the amount that they may pay to you tax-free as a pension commencement lump sum from that scheme.

Where on or after 11 August 2006 the following conditions apply, you must provide the scheme administrator with the information the scheme administrator needs to be able to work out the available portion of your lump sum allowance -

• the scheme intends to pay a pension commencement lump sum to you,
• the scheme administrator needs to know the available portion of your lump sum allowance because the amount of the pension commencement lump sum, together with previous pension commencement lump sums, potentially exceeds your lifetime cap on tax-free lump sums, and
• you have previously crystallised a scheme pension from a money purchase arrangement.

You must inform the scheme administrator that they need to know the available portion of your lump sum allowance before the lump sum is paid. The scheme administrator will ask you for the information they need.