RPSM09202070 - Member pages: Pension benefits from a defined contribution or cash balance arrangement: Reaching age 75

Reaching the age of 75 without drawing a pension

If you have reached the age of 75 without drawing a pension you must be provided with one either through the purchase or provision of a secured pension or an alternatively secured pension. This must happen even if you are still in paid employment with the sponsoring employer

Under normal circumstances an alternatively secured pension is the continuation of income withdrawal beyond an individual’s 75th birthday but the general rules apply even if you were not, as would be the case here, taking advantage of income withdrawal. Essentially you will have to choose what proportion of your remaining pension funds is used to:

• purchase a lifetime annuity contract with some (or all) of your unsecured pension fund or,
• choose (’designate’) for some (or all) of your funds to be used to provide an alternatively secured pension from your 75th birthday onwards.

If you fail to make a choice then effectively the choice is taken away from you Any uncrystallised funds are ‘deemed’ to become part of the unsecured pension fund immediately before your 75th birthday (with a lifetime allowance test being triggered). The unsecured pension fund will become an alternatively secured pension fund under that arrangement on your 75th birthday. This would all happen at 00.01 hours on your 75th birthday, i.e. just after midnight. You will then have the choice to draw a reduced income withdrawal (alternatively secured pension) from that fund, or use the fund to purchase a lifetime annuity contract (or a scheme pension if the scheme rules allow this).