RPSM09204070 - Member Pages: Member Benefits: Lump Sum Benefits: Entitlement to Authorised Lump Sum payment

Member's entitlement to Authorised Lump Sum payment

When you join a pension scheme, you may in some respects become entitled to a future expectation of a lump sum benefit, however when the tax legislation refers to your ‘becoming entitled’ to a lump sum, it is referring to a later point in time, at which you acquire a right to receive the definitive lump sum benefit.

This principle is slightly modified where a pension commencement lump sum is being paid. Here, entitlement is always deemed to arise immediately before the person becomes entitled to the pension benefit which the definitive pension commencement lump sum is linked to (see RPSM09104130). So the lump sum entitlement arises on the same day as the linked pension entitlement, but is deemed to arise before the pension entitlement. This can make a difference where the member is approaching their lifetime allowance (see the example on RPSM11105070).