A typical pension scheme provides two mutually exclusive types of benefit which are
So if the member gets to retirement age and takes their
retirement benefits (a lump sum plus pension) then the death
benefits lapse. If they die before taking their retirement benefits
the death benefit is payable in terms of the scheme rules or policy
provisions.
In a personal pension plan (
IHTM17022) the member can generally
take their retirement benefits at any time after attaining age 50
and can defer up to age 75 whether or not the member continues to
work.
It is a condition of approval of an occupational scheme (
IHTM17021) that the rules of the scheme
specify the age at which members normally retire, and this can be
between the ages of 60 and 75.
Retirement under occupational regulations means stopping work
and not returning to the same role.
In approved schemes (
IHTM17020) the death benefits can be
assigned (
IHTM17071) by the member either at
inception or at any later date pre death. The retirement benefits
cannot be assigned and must be retained by the member.
The member can defer taking their retirement benefits up to
age 75 and then must use their fund to purchase an annuity. An
exception to this rule applies for members of occupational schemes
with ‘continued rights’ (essentially controlling
directors) who may in certain circumstances defer taking the
benefits beyond age 75. On their death after age 75 the lump sum
death benefit must be paid directly to the member’s legal
personal representatives and so is liable to Inheritance Tax.
In an unapproved scheme ([
IHTM17024) there is no minimum or
maximum retirement age, no investment restriction and no prescribed
basis for taking benefits.
