RPSM10104060 - Technical Pages: Death benefits: Pensions: Main principles: Guarantee on a drawdown pension

If the member reached age 75 between 22 June 2010 and 5 April 2011 please also read the guidance at RPSM17100000 onwards.

Guarantee where a drawdown pension is being drawn

An entitlement to income withdrawal through the drawdown pension rules cannot be guaranteed. Such value protection is not needed, because any remaining drawdown pension fund may be paid out as a drawdown pension fund lump sum death benefit (see RPSM10106060). If the member died before 6 April 2011 the lump sum was called an unsecured pension fund lump sum death benefit and could only be paid if the member was aged under 75 when they died (see RPSM10105330).

Where a short-term annuity is purchased, the insurance company takes the funds in return for providing the annuity income, so the funds used to purchase the annuity are lost to the unsecured pension fund. An unsecured pension fund lump sum death benefit is therefore not an option in relation to these rights. So the legislation allows for that contract to be guaranteed, giving the member the option to choose an element of capital protection.