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 of the employer, 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.
Any benefits which have not been taken by the member’s
75th birthday will be deemed to have been taken at that point and
must be tested against the then remaining
lifetime allowance, whether actually paid or not.
How these benefits are tested will depend on the type of
arrangement being administered. For further information see
RPSM09100200 and
RPSM09100380.
| Glossary RPSM20000000 |
