PSI12.2.7 - Benefits on Death after Retirement: Lump Sum Benefits and Pension Guarantees - Guarantee Payments

(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)

(This text has been withheld because of exemptions in the Freedom of Information Act 2000)

A pension guarantee is a means of ensuring that a scheme member receives reasonable value for the contributions paid by the employer and himself/herself. Pension guarantees can take two forms

1. a refund of the member’s contributions (see PSI12.2.8-11), or
2. a continuation of the member’s pension for a fixed period or an immediate lump sum equal to the unpaid instalments up to the end of the guarantee period (see PSI12.2.15-24).

The type of guarantee described in a. was removed as part of the simplification of Inland Revenue practice announced in August 1991. It remains available only for members with continued rights in existing approved schemes at that time. You should not accept such a guarantee in a new scheme even for continued rights members.