RPSM08300120 - Scheme Administrator Pages: Pension age: When is the latest a member may take their benefits?

When is the latest a member may take their benefits?

This is a matter to be determined by the scheme rules. They may state that pension benefits must be taken when the member leaves service, or at a particular age even if they are remaining in employment, provided the member has reached normal minimum pension age.

If the scheme rules allow a member to take a pension commencement lump sum, one of the conditions for this to be paid free of income tax is that entitlement to it must arise before they reach their 75th birthday. Any lump sum paid to a member where entitlement arose on or after their 75th birthday will be treated as an unauthorised payment and they will be liable to a tax charge. The scheme administrator will also be liable to a scheme sanction charge.

The meaning of ‘entitlement’ is explained at RPSM11102050 and RPSM11102055.

After age 75 there are stricter rules on how a pension must be provided, and this is dependent on the type of scheme being administered. For further information see RPSM09100200 and RPSM09100380.