RPSM04104040 - Technical Pages: Taxation: Unauthorised payments: Overview: What is an unauthorised member payment?

What is an unauthorised member payment?

An unauthorised member payment is

• a payment by a registered pension scheme to or in respect of a member, or former member of that pension scheme that is not an authorised member payment, or
• anything which is specifically treated as being an unauthorised payment to or in respect of a member or former member under Part 4 of Finance Act 2004..

The member or former member does not have to receive the payment for it to be an unauthorised member payment. A payment could, for example, be made to some other individual or another pension scheme. As long as the payment is made in respect of a member or former member it may be classed as an unauthorised member payment.

Example

David’s pension benefits are transferred out of his registered pension scheme to another pension scheme, which is neither a registered pension scheme nor a qualifying recognised overseas pension scheme. This is not a recognised transfer, so it is not an authorised member payment. The transfer of benefits is an unauthorised member payment in respect of David’s scheme membership. David will be liable to the unauthorised payments charge and, possibly, the unauthorised payments surcharge in respect of the transfer payment.

Some of the circumstances in which the legislation deems an unauthorised payment to have been made are given on RPSM09100130