(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)
[PN10.20]
Where an early leaver's benefits are secured under a buy-out
policy (see Section 4 of this Part) or transferred to another
scheme (see Part 14), the employee may similarly be given a right
to death benefits if he or she dies before the deferred benefits
become payable. But death benefits cannot be provided from the
scheme from which the buy- out or transfer was made in these
circumstances. Where the deferred benefits have been transferred
they will become subject to the rules appropriate to the vehicle
into which they are received. Where the transfer is to another
approved occupational scheme, or one seeking approval, the effect
is to limit the total lump sum death in service benefit payable
from the receiving scheme fund and the transfer value combined to
the maximum permitted by the rules of the receiving scheme, by
reference to remuneration in the new employment. So, for example,
if the rules of the receiving scheme limit the lump sum death in
service benefit to twice final remuneration, that is the maximum
that may be paid from the whole of the fund including the transfer
value.
Any monies which remain in the transferred fund after payment
of the maximum lump sum may be used without limitation to provide
pension for any eligible widow(er) and/or dependants.
If no such beneficiaries exist, the remainder of the transfer
value is to be regarded as surplus and dealt with accordingly.
