RPSM09100176 - Technical Pages: Member benefits: Overview: Payments: Other transactions regarded as payments: Increase in rights arising after death from alternatively secured pension fund

Increase in rights arising after death from alternatively secured pension fund

Where a registered pension scheme holds ‘alternatively secured rights’ in respect of a member who died on or after 6th April 2007 (the first member), and another member (the second member) of the registered pension scheme becomes entitled to all or part of those alternatively secured rights on or after 6th April 2007 the registered pension scheme is treated as making an unauthorised payment to the second member (or to the second member’s personal representatives).

If the ‘alternatively secured rights’ are transferred to the second member by an assignment or agreement to assign on or after 6 April 2007 there will be an unauthorised payment under RPSM09100170 instead.

Alternatively secured rights

The alternatively secured rights referred to above are:

• rights representing all or part of the deceased member’s alternatively securedpension fund or dependent’s alternatively secured pension fund in respect of an arrangement under the registered pension scheme, and
• any unsecured pension fund in an arrangement that were held in suspense in respect of a member who was an untraceable member at aged 75 and all of whose uncrystallised funds in that arrangement at 75 that had been treated as having been designated under the arrangement as available for unsecured pension fund immediately before the member reached that age see RPSM09102080.
• in respect of a member who died on or after 6th April 2007.

Amount of deemed unauthorised payment

Step 1 - The first step in calculating the amount of the deemed unauthorised payment is to calculate the amount by which the amount A exceeds the amount B

The amount A is the consideration that might be expected to be received by the second member in respect of an assignment of their benefits immediately after they have become entitled to all or part of the alternatively secured rights.

The amount B is the consideration that might be expected to be received in respect of an assignment of the second member’s benefits immediately before they became entitled to all or part of the alternatively secured pension rights.

Step 2 – The amount calculated under step 1 can then be reduced by an amount representing the second member’s entitlement to pension death benefits (see RPSM10100060)

The amount after steps 1 and 2 is to be taken as the unauthorised payment.

RPSM10101060 gives details of authorised payments that can be made from any remaining alternatively secured pension fund on the death of a member, including where the member died before 6th April 2007.