RPSM09103108 - Technical Pages: Member benefits: An alternatively secured pension: Member cannot be traced at age 75

Member cannot be traced at age 75

If on a member’s 75^th birthday the scheme administrator, after taking reasonable steps, has not been able to ascertain their whereabouts, any funds which were not previously designated by the member into unsecured pension will not automatically be treated as becoming held in an alternatively secured pension fund (see RPSM09103010).

Instead the funds will be treated as being held ‘in suspense’ until a pension has been established in one of the ways explained below, after the member has ultimately been traced. The scheme may continue to manage the investment of the funds as normal during the suspense period - the term ‘in suspense’ is merely a categorisation under the tax rules meaning that the fund is not an alternatively secured pension fund.

Even though the funds go ‘into suspense’ in these circumstances, are any such funds which had not previously been designated by the member into unsecured pension will still be tested against the lifetime allowance at the member’s 75^th birthday in the way explained on RPSM11102080 (BCE 1 on deemed designation).

Once the member has been traced they have a period of six months to either:

• elect for the fund to be treated as an alternatively secured pension fund at the expiry of the six month period - in which case the ‘suspense period’ ends at the expiry of the six month period, or
• purchase a lifetime annuity - in which case the ‘suspense period’ ends when the member becomes actually entitled (see RPSM11102050) to that lifetime annuity, or
• take up the option of a scheme pension - in which case the ‘suspense period’ ends when the member becomes actually entitled (see RPSM11102050) to that scheme pension.

If they do nothing then the fund will be treated as an alternatively secured pension fund on the expiry of the six month period.

While the funds remain ‘in suspense’, any payments made from the fund will be treated as unauthorised payments. And once the member has been traced, the only authorised pension that may commence to be paid within the six month period is a scheme pension or lifetime annuity.

For the avoidance of doubt, the member will not have become entitled to receive a pension commencement lump sum in relation to the uncrystallised funds that were tested for lifetime allowance at the deemed designation (see RPSM09104130 and RPSM09104140).