From 6 April 2006 where a member of a
retirement benefits scheme or deferred annuity
contract becomes entitled to benefits before the
normal minimum pension age because they have a
protected pension age of less than 50 there are restrictions on
being employed by a connected company.
If the member is employed by a
sponsoring employer under the scheme that provided
the benefits and that employer is connected to the member they will
lose their right to a protected pension age. As a result of the
employment any payments made between the start of employment and
the member reaching normal minimum pension age will be
unauthorised member payments.
Connection has the meaning given in s839 ICTA 1988. The
Capital Gains Manual – CG14580 to 14624 explains who
connected persons are.
So a member can take benefits before age 50 and stay in
employment, or become re- employed by the same or another
sponsoring employer under the scheme as long as they are not
connected to that employer.
Example
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.
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) |
