RPSM09103100 - Technical Pages: Member benefits: An alternatively secured pension: Entitlement arising after age 75

Entitlement to an alternatively secured pension arising after age 75

In certain circumstances a member may become entitled to an alternatively securedpension under a money purchase arrangement after the age of 75.

These circumstances are as follows

• where the member becomes entitled to a pension credit after the age of 75, either directly under the scheme in question or by transferring such rights into the scheme from another registered pension scheme,
• where the member holds benefits in a hybrid arrangement, doesn’t draw benefits at age 75 but, when they do, is provided with money purchase benefits (so the arrangement becomes a money purchase arrangement at that time), or
• where an alternatively secured pension fund is transferred into a new arrangement in accordance with RPSM09103160
• where a member who was untraceable at age 75 does not within 6 months of their eventually being traced use their funds to purchase a lifetime annuity or provide/purchase a scheme pension (see RPSM09103108).

Where entitlement to an alternatively secured pension first arises after the member attains age 75 the first alternatively secured pension year will start on the day that entitlement arises, with subsequent pension years following on from that point. Again, the relevant annuity that the basis amount is calculated on at the beginning of each pension year will be obtained assuming that the member is aged 75, and not based on their actual age. This requirement applies equally to the calculation at the beginning of the first (alternatively secured) pension year, where this arises after age 75.

If an alternatively secured pension fund had previously been held under the arrangement (and had then been exhausted in the purchase of a lifetime annuity) the same principles as discussed in RPSM09102510 will apply (with the existing pension year structure set by the earlier period of alternatively secured pension being carried forward to the later alternatively secured pension fund). This can only apply where new funds are introduced into the same arrangement after the existing funds have been exhausted, for example, where the member becomes entitled to a pension credit. This will mean that no alternatively secured pension may be drawn until the beginning of the next pension year (and so no minimum income requirement applies until that point as the introduction of additional funds into the arrangement does not trigger an early review.

Where as alternatively secure pension fund is transferred into a new arrangement in accordance with RPSM09103160, the funds are treated as though they are still part of the original alternatively secure pension fund set up under the original arrangement. This does not change the date that the member originally became entitled to alternativelysecured pension under that alternatively secured pension fund or the dates the alternatively secured pension year falls between.

There are also circumstances where funds may be introduced into an existing alternatively secured pension fund after age 75. This is covered in RPSM09103080.