RPSM03305053 - Scheme Administrator Pages: Protecting pension rights from tax charges: Benefit payments - primary protection: Information for LS more than £375,000

Information needed for payment of lump sums in excess of £375,000

To pay lump sums of more than £375,000 the scheme administrator will need details of the member’s primary protection certificate.

If there is no mention of lump sums on the primary protection certificate the individual is not entitled to protection of lump sums of more than £375,000. Unless the individual has scheme specific protection of a lump sum of more than 25% (see RPSM03304000) the normal pension commencement lump sum rules will apply – seeRPSM09104100.

Where the individual’s certificate shows they have protection of lump sums rights of more than £375,000 as well as details of the amount of the lump sum shown on the certificate you will also need details of any pension commencement lump sums or stand-alone lump sums that have previously been paid. From this information you will be able to calculate the maximum allowable pension commencement lump sum (or stand-alone lump sum) – see example on RPSM03305052.

Any amount of lump sum paid over the maximum pension commencement lump sum (or stand-alone lump sum) will be an unauthorised member payment and taxed accordingly – see RPSM04104000.

If the member has previously crystallised benefits so that they have already used up their protected lifetime allowance any lump sum paid cannot be a pension commencement lump sum. It will be a lifetime allowance excess lump sum – see RPSM09105200.