RPSM10104130 – Technical Pages: Death benefits: Pensions: Dependants' scheme pension: When a limit is imposed

When a limit is imposed on the level of dependants’ scheme pension payable

Where the member dies after attaining age 75, there is a limit on the amount of dependants'scheme pension that would be authorised. This limit is described on page RPSM10104140.

The limit on dependants’ scheme pension that may be provided under a registered pensionscheme applies only where the scheme member

• died after 5 April 2006,
• had reached the age of 75 before his or her death, and
• at the time of his/her death was actually receiving one or more scheme pensions under the scheme, or was prospectively entitled to receive them.

The aggregate dependants’ scheme pension payable to any dependants of that member from a registered pension scheme must not exceed the amount of the member’s scheme pension at the date of death of the member (although certain adjustments are permitted to the member’s benefits for this purpose). A dependants’ scheme pension paid within this limit will be an authorised member payment.

Because dependants’ scheme pensions are not tested against the lifetime allowance of either the member or the dependant when they come in to payment, this restriction prevents schemes disproportionately inflating the level of dependants’ scheme pension entitlements so as to avoid the lifetime allowance charge.

The references to a member’s scheme pension above

• do not include a pension where the actual entitlement to payment to the member arose before 6 April 2006 even if it was paid as a scheme pension after that date,
• however, they do include pension where a prospective pension entitlement was in place before 6 April 2006 but the actual entitlement to payment of the scheme pension did not arise until after 5 April 2006 (see RPSM11102050 for more on entitlement).