(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)
If the member dies before taking an AVC pension and before
taking employer funded benefits - the existing rules on death in
service will apply, as described in PSI part 11. The facility for
the survivor to elect for drawdown benefits will also be available.
If the member dies before taking an AVC pension and after
taking employer funded benefits there is a requirement for a second
statutory surplus test under The Retirement Benefit Schemes
(Restriction on Discretion to Approve)(Additional Voluntary
Contributions) Regulations 1993 – SI 1993 No 3016. The second
'relevant' date being the date of death.
What this will mean is that where AVC funds were held to
provide benefits for the member, any remaining funds can be
refunded to the member's legal representative (subject to tax under
section 599A, ICTA 1988), or used for the provision of
widow's/widower's/dependant's benefits subject to Inland Revenue
limits.
AVC funds which have been held to provide own right
widow's/widower's/dependant's benefits should be tested against the
benefit limit in the scheme rules. Any funds in excess of those
needed to provide benefits up to the limit in the scheme rules may
be refunded to the member's legal representative (subject to tax
under section 599A, ICTA 1988), or used for the provision of
further widow's/widower's/dependant's benefits subject to Inland
Revenue limits.
