RPSM03106063 - Technical Pages: Protecting pension rights from tax charges: Taking benefits before normal minimum pension age: Employment after taking benefits below age 50
Loss of protection due to employment after taking benefits: protected pension age below age 50
| [Para 22(7)(b), (7A) & (7J) Sch 36] |
After becoming entitled to benefits after 5 April 2006 the individual cannot be employed by a sponsoring employer in the scheme under which benefit entitlement arose if the individual is connected to that sponsoring employer. Connection has the meaning given in s993 ITA 2007. The Capital Gains Manual - CG14580 to CG14623 - gives information on who connected persons are for the purposes of s993 ITA 2007.
So an individual becoming entitled to benefits before age 50 can stay in employment with their employer, or become employed by another sponsoring employer in the scheme, as long as the member does not meet the rare circumstance of being connected with their employer.
Example 1
A footballer may take benefits at their protected pension age and continue to play for, or be employed in a non-playing capacity with, any Football League club as long as they, for example, do not own or control the club.
Example 2
Subject to the rules of the Armed Forces Pension Scheme, an individual may become entitled to benefits from that scheme and be employed in the Armed Forces after becoming entitled to benefits, e.g. if the individual is re-called to the Armed Forces.
Protection will also be lost where the main purpose (or one of the main purposes) for early entitlement to benefits using a protected pension age is to avoid paying tax or national insurance contributions.
| Glossary (RPSM20000000) |
