PSI11.2.39 - Benefits on Death in Service: Lump Sum Benefits Controlling Directors

(This archived guidance relates to HMRC discretionary practice before the 6th April 2006. For current guidance on Registered Pension Schemes see the Registered Pension Schemes Manual)

[PN11.12]

A controlling director subject to the pre-Finance Act 1989 basis for late retirement (viz those with continued rights and those in schemes approved prior to 27 July 1989 who do not opt for the post-Finance Act 1989 package (see PSI9.1.1)) who defers his or her retirement until or beyond his or her 75th birthday, must have any lump sum payable on his or her death in service excluded from discretionary distribution if he or she dies at 75 or later. Note that this restriction does not apply to any lump sum payment in respect of a guarantee of a pension already in payment (see PSI12.2.16). The relevant scheme rule should provide for:

1. payment automatically to the legal personal representatives, or
2. payment to the surviving spouse, or, in the absence of any surviving spouse, to the legal personal representatives.

In determining whether the individual is to be regarded as a controlling director for the purpose of the above restrictions, age 75 is treated as the date of retirement for the definition in PSI3.3.4(b).